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April | 2023

Pathways to

Commercial Liftoff:

Carbon Management

This report was prepared as an account of work sponsored by an agency of the United States government.

Neither the United States government nor any agency thereof, nor any of their employees, makes any

warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness,

or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would

not infringe privately owned rights. Reference herein to any specific commercial product, process, or

service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply

its endorsement, recommendation, or favoring by the United States government or any agency thereof.

The views and opinions of authors expressed herein do not necessarily state or reflect those of the

United States government or any agency thereof.

Pathways to Commercial Liftoff:

Carbon Management

Pathways to Commercial Liftoff:

Carbon Management

Comments

The Department of Energy welcomes input and feedback on the contents of this Pathway to Commercial Liftoff. Please direct

all inquiries and input to liftoff@hq.doe.gov. Input and feedback should not include business sensitive information, trade

secrets, proprietary, or otherwise confidential information. Please note that input and feedback provided is subject to the

Freedom of Information Act.

Authors

Authors of the Carbon Management Pathway to Commercial Liftoff:

Loan Programs Office: Ramsey Fahs

Fossil Energy and Carbon Management: Rory Jacobson

Office of Clean Energy Demonstrations: Andrew Gilbert, Dan Yawitz, Catherine Clark, Jill Capotosto,

Office of Policy: Colin Cunliff, Brandon McMurtry

Argonne National Labs: Uisung Lee

Cross-cutting Department of Energy leadership for the Pathways to Commercial Liftoff effort:

Office of Clean Energy Demonstrations: David Crane, Kelly Cummins, Melissa Klembara

Office of Technology Transitions: Vanessa Chan, Lucia Tian

Loan Programs Office: Jigar Shah, Jonah Wagner

Acknowledgements

The authors would like to acknowledge analytical support from Argonne National Laboratory and McKinsey & Company; as

well as valuable guidance and input provided during the preparation of this Pathway to Commercial Liftoff from:

Office of Clean Energy Demonstrations: Andrew Dawson, Katrina Pielli, Allison Finder, Liz Moore

Office of Technology Transitions: Erik Hadland, Stephen Hendrickson, Hannah Murdoch, Katheryn (Kate) Scott

Loan Programs Office: Chris Creed, Carolyn Davidson, Matt Kittell, Julie Kozeracki, Leslie Rich, Harry Warren

Office of Policy: Carla Frisch, Steve Capanna, Neelesh Nerurkar, Elke Hodson, Paul Donohoo-Vallett, Marie Fiori

Office of Fossil Energy and Carbon Management: Brad Crabtree, Jennifer Wilcox, Noah Deich, Emily Grubert, Lynn

Brickett, Anhar Karimjee, John Litynski, Sarah Leung, Amishi Claros, Traci Rodosta, Jeffrey Hoffmann, Jose Benitez,

Tony Feric, Lisa Grogan-McCulloch, Vanessa Núñez-López, Devinn Lambert, Caleb Woodall

Office of the Secretary: Kate Gordon

Director of the Office of Economic Impact and Diversity: Shalanda Baker

Office of Energy Jobs: Betony Jones

Office of the General Counsel: Alexandra Klass, Avi Zevin, Ajoke Agboola

Argonne National Laboratory: Aymeric Rousseau

/58

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April2023PathwaystoCommercialLiftoff:CarbonManagementThisreportwaspreparedasanaccountofworksponsoredbyanagencyoftheUnitedStatesgovernment.NeithertheUnitedStatesgovernmentnoranyagencythereof,noranyoftheiremployees,makesanywarranty,expressorimplied,orassumesanylegalliabilityorresponsibilityfortheaccuracy,completeness,orusefulnessofanyinformation,apparatus,product,orprocessdisclosed,orrepresentsthatitsusewouldnotinfringeprivatelyownedrights.Referencehereintoanyspecificcommercialproduct,process,orservicebytradename,trademark,manufacturer,orotherwisedoesnotnecessarilyconstituteorimplyitsendorsement,recommendation,orfavoringbytheUnitedStatesgovernmentoranyagencythereof.TheviewsandopinionsofauthorsexpressedhereindonotnecessarilystateorreflectthoseoftheUnitedStatesgovernmentoranyagencythereof.PathwaystoCommercialLiftoff:CarbonManagementPathwaystoCommercialLiftoff:CarbonManagementCommentsTheDepartmentofEnergywelcomesinputandfeedbackonthecontentsofthisPathwaytoCommercialLiftoff.Pleasedirectallinquiriesandinputtoliftoff@hq.doe.gov.Inputandfeedbackshouldnotincludebusinesssensitiveinformation,tradesecrets,proprietary,orotherwiseconfidentialinformation.PleasenotethatinputandfeedbackprovidedissubjecttotheFreedomofInformationAct.AuthorsAuthorsoftheCarbonManagementPathwaytoCommercialLiftoff:LoanProgramsOffice:RamseyFahsFossilEnergyandCarbonManagement:RoryJacobsonOfficeofCleanEnergyDemonstrations:AndrewGilbert,DanYawitz,CatherineClark,JillCapotosto,OfficeofPolicy:ColinCunliff,BrandonMcMurtryArgonneNationalLabs:UisungLeeCross-cuttingDepartmentofEnergyleadershipforthePathwaystoCommercialLiftoffeffort:OfficeofCleanEnergyDemonstrations:DavidCrane,KellyCummins,MelissaKlembaraOfficeofTechnologyTransitions:VanessaChan,LuciaTianLoanProgramsOffice:JigarShah,JonahWagnerAcknowledgementsTheauthorswouldliketoacknowledgeanalyticalsupportfromArgonneNationalLaboratoryandMcKinsey&Company;aswellasvaluableguidanceandinputprovidedduringthepreparationofthisPathwaytoCommercialLiftofffrom:OfficeofCleanEnergyDemonstrations:AndrewDawson,KatrinaPielli,AllisonFinder,LizMooreOfficeofTechnologyTransitions:ErikHadland,StephenHendrickson,HannahMurdoch,Katheryn(Kate)ScottLoanProgramsOffice:ChrisCreed,CarolynDavidson,MattKittell,JulieKozeracki,LeslieRich,HarryWarrenOfficeofPolicy:CarlaFrisch,SteveCapanna,NeeleshNerurkar,ElkeHodson,PaulDonohoo-Vallett,MarieFioriOfficeofFossilEnergyandCarbonManagement:BradCrabtree,JenniferWilcox,NoahDeich,EmilyGrubert,LynnBrickett,AnharKarimjee,JohnLitynski,SarahLeung,AmishiClaros,TraciRodosta,JeffreyHoffmann,JoseBenitez,TonyFeric,LisaGrogan-McCulloch,VanessaNúñez-López,DevinnLambert,CalebWoodallOfficeoftheSecretary:KateGordonDirectoroftheOfficeofEconomicImpactandDiversity:ShalandaBakerOfficeofEnergyJobs:BetonyJonesOfficeoftheGeneralCounsel:AlexandraKlass,AviZevin,AjokeAgboolaArgonneNationalLaboratory:AymericRousseauPathwaystoCommercialLiftoff:CarbonManagementTableofContentsExecutiveSummary1Chapter1:IntroductionandObjectives5Chapter2:CurrentState–CarbonManagementTechnologiesandMarkets7Section2.a:Technologylandscape7Section2.a.iPoint-sourcecapture8Section2.a.iiCarbonDioxideRemoval(CDR)12Section2.a.iiiTransport14Section2.a.ivStorage16Section2.a.vEnhancedOilRecovery(EOR)storage18Section2.a.viUtilization18Section2.bCurrentregulationandpoliciessupportingCCUSandCDRdevelopment19Chapter3:PathwaystoWidespreadDeployment22Section3.aThepathwaytowidespreaddeployment22Section3.bImpliedcapitalformation29Section3.cBroaderimplications30Section3.c.iSupplychain31Section3.c.iiEnergyandenvironmentaljustice32Chapter4:ChallengestoCommercializationandPotentialSolutions36Section4.aOverviewofchallengesandconsiderationsalongthevaluechain36Section4.bPrioritysolutions40Chapter5:MetricsandMilestones42Chapter6:References43PathwaystoCommercialLiftoff:CarbonManagementPurposeofthisReportTheseCommercialLiftoffreportsaimtoestablishacommonfactbaseandongoingdialoguewiththeprivatesectoraroundthepathtocommerciallift-offforcriticalcleanenergytechnologies.Theirgoalistocatalyzemorerapidandcoordinatedactionacrossthefulltechnologyvaluechain.ExecutiveSummaryModelingstudiessuggestreachingU.S.energytransitiongoalswillrequirecapturingandstoring400to1,800milliontonnes(MT)ofcarbondioxide(CO2)annuallyby2050,throughbothpoint-sourcecarboncapture,utilization,andstorage(CCUS)andcarbondioxideremoval(CDR).iToday,theU.S.hasover20milliontonnesperannum(MTPA)ofcarboncapturecapacity,1–5%ofwhatcouldbeneededby2050.1,ii,iiiThisscale-uprepresentsamassiveinvestmentopportunityofupto~$100billionby2030and$600billionby2050.America’s>20MTPAofcapturecapacityalreadyleadstheworldincarbonmanagement,andtheU.S.isanattractivepolicyandresourceenvironmentforfurtherdeployment.Anincreaseinthevalueofthe45Qtaxcredit—afederaltaxcreditprovidedforstoredorutilizedCO2—hasprovidedagreaterincentiveandmorecertaintytodevelopersandinvestorsandislikelytoyieldattractivereturnsforseveraltypesofprojects.ivInaddition,recentclimateandinfrastructurelegislationhasprovided~$12billioninfundingtosupportU.S.carbonmanagementprojects.TheU.S.hasexcellentgeologyforstoringCO2,world-classengineeringandprofessionaltalent,andrelativelyabundantlow-costzero-carbonenergyresourcesthatcanpowercarbondioxideremoval(CDR)projectstomaximizenetcarbonremoved.Manylarge-scalecarbonmanagementprojectsarealreadyprovingfinanciallyattractivetodaywithenhancementstothefederal45Qtaxcredit,andinvestorshaveraisedbillionstotakeadvantageoftheseopportunities.v,viTheseinvestmentsrangefromearly-stageequityinvestmentsincarboncapturetechnologyproviderstolarge-scaleprivateequity-backedinvestmentsinCO2transportinfrastructure.Thisreportoutlinesthepathtomeaningfulscaleincarbonmanagement,whichweexpecttodevelopbetweennear-termandlonger-termopportunitiesthrough2030(Figure1.).2,3,41.Fornear-term(through2030)opportunities,projectsinindustrieswithhigh-purityCO2streams(e.g.,ethanol,naturalgasprocessing,hydrogen)havethebestprojecteconomics.Manyofthesetypesofprojectsareinactivedevelopmentorarealreadyinoperation.Large-scaletransportationandstorageinfrastructureislikelytoemergetoservetheseprojects.Thesedevelopments—alongwithsomepromisingdemonstrationprojectsinhigher-costcarbonmanagementapplications(e.g.,steel,cement)—willlaythefoundationformorewidespreaddeploymentbyestablishingbest-practicesincontracting,financing,permitting,communityengagement,laboragreements,workforcedevelopment,and,insomecases,throughbuildingoutcommoncarriertransportandstorageinfrastructurethatfutureprojectscanuse.2.Forlonger-term(post-2030)opportunities—industrieswithlower-purityCO2streamsanddistributedprocessemissions—projecteconomicsmustimprovetomakewidescaledeploymentlikelyintheabsenceofotherdrivers(e.g.,regulation).Demonstrationprojectsfromnowthrough2030cansupportcostdeclines—boththroughlearning-by-doingandstandardizingprojectdevelopmentstructures.Andincreasedpolicysupport(eitherviaregulationorincentives)ortechnologypremiumsforlow-carbonproducts(e.g.,lowembodiedcarbonsteelandconcrete)wouldleadtomoreCCUSandCDRprojects.5Theseend-user-backedtechnologypremiumscombinedwithsustainedandpredictablegovernmentsupportcanprovideconsistentrevenuestreamsasdeploymentexperiencereducescosts.1Note:Anyuseof“tonnes”inthisreportreferstometrictonnes;referencestoMTPArefertomilliontonnesperannum2DatainthisreportforCCUSapplicationsfocusonlyonincrementalcostsandrevenuesassociatedwithretrofittinganexistingfacilitywithinstallingandoperatingcarboncapture.Theydonotreflecttheoveralleconomicsofagivenfacility.3Near-termandlonger-termopportunitiesrefertoaneconomicanalysisofcarbonmanagementprojectsunderthecurrentpolicyandregulatoryenvironmentandisnotmeantasacommentonthetechnicalfeasibilityoftheseprojects.Awideportfolioofcarbonmanagementtechnologiesforasuiteofapplicationsarecommerciallymatureandreadytodeploytoday.4Wenotethatthediscussioninthispaperexamineseconomicbreak-evenpointsforcarboncaptureintheabsenceofregulatorydrivers.Anystateorfederalregulatoryactionscoulddramaticallyacceleratethebusinesscaseforprofitableinvestmentsincarbonmanagement.5TheFederalBuyCleanTaskForceandtheFirstMover’sCoalitionarebothseekingtoprovideacleardemandsignalforlowembodiedemissionsproducts1PathwaystoCommercialLiftoff:CarbonManagementCurrentlyprofitableNear-termopportunitiesLonger-termopportunitiesNascenttechnologyProjectspecificeconomicsdependentonCO2capturecapacity,utilization,distancetostorageandexistingequipmentDevelopingeconomicsFigure1:ConcentratedsourcesofCO2(e.g.,inethanolorhydrogenSteamMethaneReformer(SMR)capturefacilities)arecurrentlyprofitablebutdonotincludesufficientemissionsreductionsalonetoachievenetzerogoalsCost1andrevenue2perindustryortechnologytoday,$/tonne1DisplayedcostestimatesbasedonEFIFoundationcapturecostswithtransport(GCCSI,2019)andstorage(BNEF,2022)costsof~$10-40/tonne,exceptwherenoted.Allin2022dollars.AllCCUSfiguresrepresentretrofits,notnew-buildfacilities.ThelowerboundcostsrepresentsaNOAKplantinalowcostretrofitscenariowithlowinflation.ThehigherboundcostsrepresentsaFOAKplantinahighcostretrofitscenariowithhighinflation.Theinflationvarianceoneachcostestimaterepresentstherangeofcostincreasesonagenericchemicalprocessingfacilityduetoinflationfrom2018usingtheChemicalEngineeringPlantCostIndex(CEPCI).2Revenuesbasedonapplicablemixof45Qtaxcredit,LowCarbonFuelStandard,VoluntaryCarbonMarketsandthe45Vtaxcredit(whichcannotbestackedwith45Q).Othersourcesofrevenue(e.g.,premiumPPAs,EOR)arediscussedinmoredetailintheappendix.Taxcreditvaluesdonotreflectexpecteddiscountstothefacevalueofthecreditassociatedwithtaxequityfinancingortransferability.Forretrofits,revenuedoesnotreflectthevalueofproductsalreadysoldbythefacility(e.g.,electricityfromanexistingpowerplant)3Currenthydrogencapacityislikelytogrowwiththegrowthofreformation-basedcapacityandfuturedemandlikely4IncludesBECCStopower,biochar,andbio-oil;Biocharandbio-oilmaynotbeeligiblefor45QSource:EFIFoundation,“TurningCCSProjectsinHeavyIndustry&PowerintoBlueChipFinancialInvestments”.HydrogenSMR-onlycapturecostsfromIEA2019.;CoalandCCGTpowerplantretrofitcostofcapturefiguresderivedfromNETLRevision4aFossilBaselinestudyretrofitcasesadjustedto2022dollarsandwith12-yearamortization—rangerepresentsFOAKwithhighretrofitfactor(highfigure)toNOAKwithlowretrofitfactor(lowfigure).DACcostsfromNETL:Directaircapturesolventandsorbentstudies;UpperboundofsolidsorbentfromClimeworks2018,alsocitedin“Areviewofdirectaircapture(DAC):scalingupcommercialtechnologiesandinnovatingforthefuture"(McQueen2021);BiCRScostestimatesfromCoalitionforNegativeEmissionsforfirst-of-a-kindBECCSforpowerwithmodifiedfinancingcostssameasabove.LowrangesofpurchaseofbiomassprocessedfeedstockandbiomasstransporttakenfromFAOU.S.biomasscostestimatesratherthanCoalitionforNegativeEmissions,whichhashigherestimatesapplicabletoaUK-basedplant(“EconomicanalysisofwoodybiomasssupplychaininMaine(Whalley2017))andICEF“BiomassCarbonRemovalandStorage(BiCRS)Roadmap”(2021),CharmIndustrial“CarbonRemoval:PuttingOilBackUnderground”(2021);MineralizationcostsfromauthorbenchmarkcostusedinIPCC.Costsforexsitumineralizationwithwollastonite,olivine-rich,andserpentine-richtailingsusingheatandconcentratedCO2fromKelemenP,BensonSM,PilorgéH,PsarrasPandWilcoxJ(2019)AnOverviewoftheStatusandChallengesofCO2StorageinMineralsandGeologicalFormations.Front.Clim.1:9.doi:10.3389/fclim.2019.00009;CurrentemissionsfromEPAGHGRPFLIGHTdatabase2019andincludesbiogenicCO2emissionsforpulpandpaper(~110MTPA)Note:CCUSfiguresrepresentincrementalcostsandrevenuesassociatedonlywiththeinstallationandoperationofcarboncaptureretrofits,nottheoverallfacilityeconomicsofthefacilityinquestion.Note:Applicationsarearrangedleft-to-rightbyindustry,power,andCDRreflectingtheroughCO2concentrationoftheCO2sourcesassociatedwiththeseapplications85858585Refineries(FluidizedCatalyticCracker)Ammonia(fluegas)Steel(BlastFurnace–BOF)90Hydrogen(SMRandsteamproduction,90%capture)66CementproductionBiCRS4Powerplants-CCGT1,180Pulp&paper(Blackliquorboiler)Mineralization(ex-situ)Ethanol1631956015410016128513415985176DAC6001268515685600500500NaturalgasprocessingPowerplants-CoalHydrogen(SMRonly)100N/A~503~140~590~1700Low-rangeCostLow-rangeRevenueCurrentemissions(CCUSnotviableforallemissionsinagivensector)xHigh-rangeCostHigh-rangeRevenue2Progressacrossnear-termandlonger-termopportunitiescouldcreatecommercial“lift-off”betweennowand2030asprojectfinancemechanismsbecomede-risked,arobustecosystemofenablingtransportandstorageinfrastructurematures,stateandfederalregulatoryrequirementspromotelower-GHGalternatives,andcapitalmarketsbecomecomfortablewithcarbonmanagementprojectsasanassetclass.600PathwaystoCommercialLiftoff:CarbonManagementThechallengesfacingwidespreaddeploymentofcarbonmanagementarerealbutsolvable.•EstimatedprojecteconomicsforCCUSretrofitsonhigher-cost-to-captureapplications(e.g.,cement,andsteel)willnotleadtowidespreaddeploymentwithoutcostorrevenueimprovementsoradditionalpolicy.–FurtherdemonstrationprojectsinthesesectorscanenablefasterCapitalExpenditure(CapEx)costreductionsthroughcommercialstandardization,modularization,andtechnologyimprovements.6DOEdemonstrationfundingcouldspurcostimprovementinthesesectors.•InCDR,voluntarycarbonmarketscanbeunpredictableandinconsistent,andlong-termpricesandvolumesremainuncertain.Evenwithhighexpectedgrowth,voluntarymarketsmaybeinsufficienttosupportthescaleofdeploymentrequiredtoachieveU.S.netzerogoals.–IncreasingthetransparencyandcertaintyofthevoluntaryandcompliancemarketsforCDRcanincreasemarketsupport.Twofactorscouldcreatelong-termrevenuesources:(1)regulationsthatfavorCDRdeploymentand(2)increasedtechnologypremiumsforCDRdrivenbyend-userdemand.Projectfundinganddemand-sidemarketsupportfromDOEcouldhelpstabilizethemarketforCDRdevelopersandinvestors.•AcrossCCUSandcertaintypesofCDR,theneedformulti-partyagreements(e.g.,betweenemittingfacilities,captureproviders,transportproviders,andstoragefacilities)andalackofcommercialstandardizationcomplicateprojectdevelopment.–Potentialsolutionsincludecreatingarchetypal,field-testedbusinessmodelsandtermstoenablethedevelopmentandexecutionofpartnerships.PrivatesectorleadershipandDOE-supported“hubs”fordirectaircapture(DAC)andCCUScouldsimplifyprojectdevelopmentbycreatingstandardcommercialarrangementsthatsimplifythedevelopmentprocess.7•Permittingdedicatedgeologicstorageprojects(e.g.,ClassVIinjectionwells)maybeseenbydevelopersandinvestorsasalonganduncertainprocess.–CongressprovidedfundingtoEPAthroughtheBipartisanInfrastructureLaw(BIL)tosupportthefederalClassVIpermittingprogramaswellastoprovidegrantstostates,Tribes,andterritoriestopursueandimplementClassVIprimacyapplicationsandprograms.EPAanticipatesapproximatelytwoyearsfromreceiptofcompletedClassVIapplicationstoissuanceofapermitandhasdevelopedaseriesoftoolstohelpstreamlinethepermittingprocess.vii•Alackofcommon-usetransportandstorageinfrastructurecouldhinderdevelopmentandmayencourageuncoordinatedorduplicativesourceandstoragematching.–ProjectsdevelopedtodaycanbuildoutCO2transportationnetworksandstoragefacilitiesthatcanserveassharedinfrastructureforfuturecarbonmanagementprojectslocatednearby.DOEwillsupportdevelopmentofsharedstoragefacilitiesandtransportinfrastructurethroughBipartisanInfrastructureLaw(BIL)funding.•SomegroupsopposeCCUSprojectsorpolicysupportforthemandothersareunfamiliarwiththetechnology.ix–Addressingtheseconcerns,includingenvironmentaljusticeconsiderations,requirescommitmenttoresponsiblecarbonmanagementfrompolicymakersandindustrytobuildtrustwithcommunitiesconsideringcarbonmanagementprojects.Developersmustanticipate,listento,andaddressstakeholderconcernsthroughearly,substantive,andtransparentengagementonthebenefitsandrisksoftheseprojects.–DOE’sOfficeofFossilEnergyandCarbonManagement(FECM)haslaunchedadomesticengagementframeworktooutlineitsvisionforsuccessfulengagement.Theframeworkservesastheguidingprinciplestoensurethattangibleenvironmental,economic,andsocialbenefitsflowtocommunities.Additionally,DOEhasaddedrequirementsforcarbonmanagementfundingopportunityapplicantstoincorporatecommunityengagement;diversity,equity,inclusion,andaccessibility;environmentaljustice;andqualityjobsplansintotheirapplicationsandprojectplans.6CCUSandcertainCDRtechnologieshavesignificantOpExexpenses(roughly50%oflevelizedcosts)intheformofenergyandmaterialinputs.ThesepersistentOpExcostsmakethedramatictotalcostdeclinesobservedinfuel-freeenergytechnologieslikewindandsolarunlikely.7DACisoneofseveralCDRpathwaysdiscussedfurtherinChapter2.3PathwaystoCommercialLiftoff:CarbonManagementDOE,inpartnershipwithotherfederalagenciesandstateandlocalgovernments,hastoolstoaddressmanyoftheseissuesandiscommittedtoworkingwithcommunitiesandtheprivatesectortobuildoutthenation’scarbonmanagementinfrastructureandmeetthecountry’sclimate,economic,andenvironmentaljusticegoals.Carbonmanagementisexperiencingaonce-in-a-generationopportunitygiventhecurrentpolicyandmarketenvironment.The45Qtaxcreditprovidescertaintyandattractiveprojecteconomicsforseveralprojecttypes.FundingforcommercialdemonstrationanddeploymentprojectsinBILandtheInflationReductionAct(IRA)canspurcarbonmanagementprojectsinindustriesinwhichprojecteconomicswouldotherwisestillbechallenging,providinginvestorswithsector-specificblueprintsforprojectdevelopment.Substantialandresponsibleinvestmentincarbonmanagementdeploymentoverthenextdecadecanproveoutbusinessmodelsandgeneratethecommunity,market,andpolicybuy-inthatcarbonmanagementwillneedtocontributemeaningfullytothenation’senergyfuture.4PathwaystoCommercialLiftoff:CarbonManagement8Currentrangeisbasedonintegratedenergymodellingasdiscussedinthe“PathwaystoCommercialLiftoff:OverviewofSocietalConsiderationsandImpacts”.Expandedrangebasedonseveralgovernmentandotherresearchreports,including:Princeton’sNetZeroAmericareport(2021,theWhiteHousePathwaystoNet-ZeroGHGEmissionsby2050(2021),TheIPCC(2021,IRENA(2021),IEA(2021);Somemodelledscenariosestimatefigureshigherorlowerthanthisrangedependingonthelevelofdeploymentofotherdecarbonizationtools(e.g.,renewableelectricity,nuclear,reforestationandlandusechange)Chapter1:Introduction&ObjectivesTheU.S.willlikelyneedtocaptureandpermanentlystore~400–1,800milliontonnesofCO2annually(MTPA)tomeetitsnet-zerocommitmentsby2050(Figure2.).8Thisreportprovidesapathwayforreachingthisobjective.Itfocusesonthenear-termcarbonmanagementprojecttypesandbusinesscasesthatarealreadyattractinginvestorinterest.Thereportdiscussesthefullcarbonmanagementecosystem,includingpoint-sourcecarboncapture,utilization,andstorage(CCUS)andcarbondioxideremovaltechnologies(CDR).Withinpoint-sourceCCUS,thisreportfocusesonretrofitsinthefollowingsubsectors:•Ammonia•Coalpower•Cement•Chemicalsandrefining•Ethanol•Hydrogen•Ironandsteel•Naturalgaspower•Naturalgasprocessing•PulpandpaperWithinCDR,thisreportfocuseson:•Biomasscarbonremovalandstorage(BiCRS)•Directaircapture(DAC)•MineralizationThereportalsoassessesopportunitiesforCO2utilization,including:•Buildingmaterials•Plastics•Synfuels5Finally,thisreportconsidersthetransportandstorageinfrastructurethatwillenableprojectstogeologicallystoreCO2ortransportittoapointofuse.Achievinganet-zeroeconomywillrequirehundredsofbillionsofdollarsofcapitalinvestmentincarbonmanagementdeployments.Policysupport—throughcompliancemechanisms,taxincentives,demonstrationfunding,procurement,andregulatoryrequirements—willbekey,butthemajorityofprojectdevelopmentandfinancingwillbeimplementedbytheprivatesector.Theanalysisinthisreportprovidesaprimertoinvestorsandothersinterestedincarbonmanagementonthebasiceconomicsofcertaincarbonmanagementprojecttypes,thekeyrisksandchallengestheseprojectsface,andpotentialsolutionstothosechallenges.PathwaystoCommercialLiftoff:CarbonManagementEstimatesofU.S.CCUS,CDR2requiredtoreachNetZeroby2050,GTPACO20.80.50.80.50.70.32021WhiteHousePathwaystoNet-ZeroGHGEmissionsby20502021AGUAdvances2021EnergyEvolved2021PrincetonNetZeroAmerica0.4-1.22021IRENA2021IPCCReport2021IEANetZeroScenario0.7-1.80.4-1.50.6-1.0Avg=1.0Specializedcases(e.g.,SSPI)onlyusenon-technologicalCDRtoreachNetZerogoalsFivescenariosanalyzedwithcentralcaseof1.1GTPACO2capture.NobreakdownbetweenpointsourceandCDRincluded.18%Ninescenarioswithnobreakdownbetweenpointsourceandremovalincluded.Centralcaseof0.8GTPACO2capture14%Globalanalysis1of7.6GTPAwith~70%pointsource,30%CDR20%Globalanalysis1of8.0GTPAwith~60%pointsource,40%CDR20%Fivescenarios,butnobreakdownbetweenpointsourceandCDRincluded.Centralscenarioincludes0.8GTPACO2capture16%Numerouspathwaysanalyzed,withpoint-sourcemodeledupto1.3GTPA.Breakdownnotincludedforeverypathway20%Globalanalysis1of7.9GTPAwith~40%pointsource,60%CDR20%1GlobalestimateswerescaleddownusingtheUnitedStatesshareofglobalCO2emissions,currentlyreportedbyEPAat15%.AmountsshownhereareindicativeandnotaprescriptivetargetassectoralheterogeneityintheemissionsdistributionwillresultindifferingrequirementsforCCUSandCDR2ItshouldbenotedthatCCUSandCDRarenotinterchangeableandconstituteuniquesetsoftechnologies.CCUSabatesCO2emissionsfrompointsources,whileCDRcanmitigatedifficulttodecarbonizesectors(afteremissionshavebeenreleased)oraddressemissionsovershootSources:IPCC6thAssessmentWorkingGroup,2021;IEANetZeroEmissionsScenario,2021;IRENA1.5DegreeScenario,2021;Princeton’sNet-ZeroAmericastudy,2021;Long-TermStrategyoftheUnitedStates,PathwaystoNet-ZeroGreenhouseGasEmissionsby2050,2021;EvolvedEnergyResearch350PPMPathwaysfortheUnitedStates,2021;Note:GlobalscenariosinthisfigureassumeU.S.CCUSandCDRdeploymentwillreflectU.S.shareofglobalemissions,thoughsectoralemissionsdifferencesandotherfactorscoulddrivehigherorlowerCCUSandCDRadoptionrelativetoglobalemissionsshareFigure2:AwiderangeofdecarbonizationstudiesfindasignificantroleforbothCCUSandCDRtoachievenetzerogoalsby2050.CCUSandCDRarenotinterchangeabletechnologies—CCUSwillabateemissionsfrompointsourceswhileCDRcanaddressemissionsovershootormitigateotherdifficulttodecarbonizesectors.Aportfolioofcarbonmanagementtechnologiesforasuiteofapplicationsarecommerciallymatureandreadytodeploytoday.Thereareseveraldozencommercial-scalecarbonmanagementprojectsinoperationtodayandwelloverahundredareinstagesofprojectdevelopment.xiThecostsassociatedwithacarbonmanagementprojectvarybasedonthetypeoffacilityCCUSisappliedtoortheCDRtechnologyutilized,aswellasseveralregionalandfacility-specificfactorsthatcandrivevariationinthecostassociatedwithcapturing,transporting,andstoringorusingatonofCO2.9Costsforaspecificcarbonmanagementprojectcouldvaryevenoutsideoftherangesoutlinedinthisreportdependingonfacility-specificcharacteristicsandenergypricesthatcanhaveasignificantimpactontheultimatecostofdeployment.Inthisreport,“near-term”and“longer-term”opportunitiesrefertoaneconomicanalysisofcarbonmanagementprojectsunderthecurrentpolicyandregulatoryenvironmentandisnotmeantasacommentonthetechnicalfeasibilityoftheseprojects.Awideportfolioofcarbonmanagementtechnologiesforasuiteofapplicationsaretechnicallyandcommerciallymatureandreadytodeploytoday.Moreover,thediscussioninthispaperexamineseconomicbreak-evenpointsforcarboncaptureintheabsenceofregulatorydrivers.Anystateorfederalregulatoryconstraintscoulddramaticallyacceleratethebusinesscaseforprofitableinvestmentsincarbonmanagement.Finally,datainthisreportforCCUSapplicationsfocusonlyonincrementalcostsandrevenuesassociatedwithretrofittinganexistingfacilitywithinstallingandoperatingcarboncapture.Theydonotreflecttheoveralleconomicsofagivenfacility.6PointsourceCCUSCDRLowrangeHighrangeCarbonmanagementmitigationcontributiontoNetZero9ThisreporthasreferencedtheNationalEnergyTechnologiesLab’s(NETL)“Revision4a”ofits“CostandPerformanceBaselineforFossilEnergyPlants”forCCUSretrofitsinpowertheEnergyFuturesInitiative’srecent“TurningCCSProjectsinHeavyIndustryintoBlueChipinvestments,”forCCUSretrofitsinindustrialapplications.NETLhasalsopublishedrecentnumbersonCCUSretrofitsinindustrialapplications;seeNationalEnergyTechnologyLaboratory.(2022).CostofManufacturingCO2fromIndustrialSources.Thisreporthasalsousedotherestimatesfromtradegroupsand,insomecases,individualcompanies’announcedcostsandcosttargets.ERR能研微讯微信公众号：Energy-report欢迎申请加入ERR能研微讯开发的能源研究微信群，请提供单位姓名（或学校姓名），申请添加智库掌门人（下面二维码）微信，智库掌门人会进行进群审核，已在能源研究群的人员请勿申请；群组禁止不通过智库掌门人拉人进群。ERR能研微讯聚焦世界能源行业热点资讯，发布最新能源研究报告，提供能源行业咨询。本订阅号原创内容包含能源行业最新动态、趋势、深度调查、科技发现等内容，同时为读者带来国内外高端能源报告主要内容的提炼、摘要、翻译、编辑和综述，内容版权遵循CreativeCommons协议。知识星球提供能源行业最新资讯、政策、前沿分析、报告（日均更新15条+，十年plus能源行业分析师主理）提供能源投资研究报告（日均更新8~12篇，覆盖数十家券商研究所）二维码矩阵资报告号：ERR能研微讯订阅号二维码（左）丨行业咨询、情报、专家合作：ERR能研君（右)视频、图表号、研究成果：能研智库订阅号二维码（左）丨ERR能研微讯头条号、西瓜视频（右)能研智库视频号（左）丨能研智库抖音号（右)PathwaystoCommercialLiftoff:CarbonManagementChapter2:CurrentState–CarbonManagementTechnologiesandMarketsSection2.a:Technologylandscape•Thecarbonmanagementvaluechainisbroad—featuringdifferentmethodsandtechnologiesateachstage(i.e.,capture,transport,utilization,andstorage).Capturerepresentsthemajorityofcostsformostprojects,whilerobusttransportandstorageorutilizationnetworksarenecessarytomakeprojectsviable.•TheU.S.leadstheworldinCCUScapacity(over20MTPA),drivenbyCO2fromhigh-puritysources,coupledwithincidentalgeologicstoragethroughenhancedoilrecovery(EOR).•TheU.S.hasenoughgeologicstoragecapacityfortrillionsoftonnesofCO2;enoughtostoretheentiretyofU.S.emissionsforhundredsofyears.xiiThoughstorageresourcesareabundant,theymustbecharacterizedanddevelopedtobecomecommerciallyoperational,andsomeinindustrypointtothepermittingprocesstodevelopstoragesitesasabottlenecktoaccelerateddeploymentintheU.S.•CDRtechnologieshavelesscommercialdeploymentexperiencerelativetoCCUS,withlimitedtechnologicalCDRcapacityintheU.S.today.Arecentspateofannouncedprojectsandinvestmentscoulddrivecostdeclinesoverthenextdecade.•CO2transportsystemstolinkcaptureandstoragesitesrequirescale-up.Currentestimatessuggestthat30,000to96,000milesofpipecouldberequiredtomeetnetzerogoalsby2050(vs.~5,000milesofU.S.CO2pipelinesoperatingtoday.)•Beyondcertainnicheapplications,CO2utilizationpathwaysarenascentandcurrentlyuneconomicrelativetoincumbentproducts.Deploymentincentivessuchasthe45Qtaxcreditalsoprovideagreaterrevenuesourceonaper-tonnebasisfordedicatedgeologicstoragerelativetoutilization.Therearethreemainpartstothecarbonmanagementvaluechain:CO2capture(frombothpoint-sourcesandtheatmosphere),transport,andstorageorutilization(Figure3.).Keyparticipantsinthevaluechainincludelargeincumbentfirms,startups,companiesinemittingindustries,EPCfirms,CDRcreditbuyers,andtransportandstorageproviders.10Arangeofotherplayersalsointeractwithandfacilitatethecarbonmanagementecosystem,includingthecommunitiesinwhichprojectsoperate,thelaborforcethatbuildsandoperatesprojects,investors,landowners,andvoluntarycarbonmarketplaces.10Mostlylargeamine-capturecompanies,includingoilandgas(e.g.,Exxon)andindustrialcompanies(e.g.,Mitsubishi);Mostlytechnologydrivenstart-upsinnewcaptureandremovaltechnologies(e.g.,Climeworks)7PathwaystoCommercialLiftoff:CarbonManagementFigure3:ThevaluechainandapplicationsthatareinfocusforthisanalysisarehighlightedingreenSection2.a.iPoint-sourcecapturePoint-sourcecaptureistheseparationofCO2fromanindustrialfacilityorpowerplant’sfluegas,syngasorprocessstream.xiiiThesesourcesrepresentapproximately750MTPAand1,700MTPAofpoint-sourceindustrialandpoweremissionsintheU.S.,thoughonlyasubsetoftheseemissionswilllikelybeaddressedthroughcarbonmanagement(SeeFigure4).xivAsignificantnumberoftheseCO2point-sourcessitontopof,orareincloseproximityto,favorablegeologyforlarge-scalecarbonstorage.Favorablegeologyincludesacombinationofgeologicsinkswithlargecarbonstoragecapacity,suchasdeepsalineaquifers,andoverlayingconfiningrocklayersforstoragepermanence.Thesegeologicfeaturesrequirevalidationthroughregionalcharacterizationworkandfurthersitecharacterizationforconfirmationonaproject-by-projectbasis.CO2compression&transportCO2use/storageCO2sourcesCO2capture1234ModeoftransportingCO2frompointofcapturetopointofuse/storage,withthegreenhighlightedareasthefocusofthisreport:Focusforthisreportincludesthefollowinggreenhighlightedapplications:WaysbywhichCO2canbestoredorusedEORstorageUseinplasticsStorageinsalineaquifersanddepletedoilandgasreservoirsCO2intheatmosphereEmissionsfrompoint-sources(e.g.,industrialfacilities)Atmosphericandothercapture:Avarietyofcapturetechnologies,withthehighlightedareasthefocusofthisreport:Point-sourcecapture:CO2sources,withthegreenhighlightedareasthefocusofthisreport:BiCRS(Incl.BECCSandbiochar/bio-oil)MineralizationDirectAirCapture(DAC)UseinsynfuelUseinbuildingmaterialsNaturalgaspowerEthanolCoalpowerCementSteelHydrogenNaturalgasprocessingAmmoniaRefiningandchemicalsPulpandpaperNaturebasedsolutionsOceancapturePipelineRailBarge/shipTruckMineralization8NOTEXHAUSTIVE-INCLUDESFOCUSAPPLICATIONSEXPLOREDINTHISREPORTFocusofthisreportPathwaystoCommercialLiftoff:CarbonManagementMapofU.S.pointsourceCO2emissionsbysector,20191HighpurityandprocessCO2streamsaresolid,withtotalCO2emissionsshownbydottedline.Waste,non-industrialsectors,andsomepetroleumandNGemissionsamountingto~500MTPAarenotshownonthemapandintheMTPAbreakdown2IncludesSummit,Navigator,ADM,andTallgrassproposedCO2pipelinesfromprojectwebsites3ExplorationofcaptureonNGtransmissionanddistributionfacilities(includingLNGterminals)isoutofthescopeofthisreport,thoughthereareexpectedtobeCCUS-addressableemissionsinthatsectorSource:EPAGHGRPFLIGHTdatabase2019includingbiogenicCO2forpulpandpapersector,additionalpublicinformationonsmallerpointsourceemitters,andestimatedadditionalemissionsfromethanolfacilitiesinEIAethanolplantdatabase;Summit,Navigator,ADM,andTallgrassCO2pipelineprojectwebsites;NatCARBAtlasVDatabase;EstimatesonproportionofCCUS-addressableemissionscompiledfromEPAFLIGHTdatabase,DOEIndustrialDecarbonizationRoadmap,andMcCoyet.al(2016)forEthanol,SaguesEt.al(2020)forPulpandPaperFigure4:AsubstantialnumberofU.S.industrialpointsourceemissionsarewithin50milesofCO2transporttosalineaquifersthatcouldbesuitableforgeologicstorage.Salineaquifersrequirecharacterizationworktovalidatetheirsuitabilityforcommercialstoragexv,xvi2022wasabanneryearforcarbonmanagementprojectannouncements.Oneindustrydatabaseistracking~140MTPAinannouncedprojectstargetingcompletionby2030(Figure4).Noteveryannouncedprojectwillsuccessfullyreachcommercialoperationdate(COD).However,manyhavelineofsighttofirmandfinanceablecashflows,especiallywhenprojectstacklelowcost-of-captureemissionsstreams.Manyoftheseprojectsarebackedbyexperiencedinvestorsandmanagementteams.CO2proposedpipeline2CO2existingpipelineSalineAquifers2MTPA8MTPAPointsourceCO2emissionsbysector1,MTPA~2,500facilities10sectors561172746750174032Refineries107AmmoniaIronandsteelNGProcessingPulpandpaperCement130Hydrogen77EthanolLNGequipment0Chemicals178723567604434Note:Notallemissionsareaddressablethroughcarboncapturealone.Plantbyplantfeasibilitystudiesarerequired.UnlikelytobeaddressedthroughCCUSPotentiallyaddressablethroughCCUS9PathwaystoCommercialLiftoff:CarbonManagementU.S.pointsourceCCUScapturecapacitybyyear,MTPAFigure5:TheU.S.hasover20MTPAofoperationalpointsourceCCUScapacity,withanannouncedprojectpipelineof~140MTPAasofDec2022ThecostofCCUSretrofitsdependsheavilyontheplantinquestion.Ingeneral,thecostofCO2captureisinverselyproportionaltotheCO2purityoftheemissionstream.Butevenwithinthesameindustry,severalfactorsmeaningfullyimpactthecostofcapture,includingfacilitydesign,11separationtechnologyusedinthecaptureprocess,localenergyprices,emissionsvolumes,fluegastemperatureandpressure,andthepresenceofemissionsstreamcontaminants.Becauseoftheseproject-specificfactors,estimatescanvarywidelyforcurrentandprojectedcosts.12Ingeneral,capturecostsarethemostexpensivecomponentintheCCUSvaluechain,buteconomiesofscale,learningbydoing,modularizationandstandardization,andnovelcapturetechnologiescouldallyieldsignificantcostimprovements.(Figure6)131414233342129212892198810704020806030140509012010001101501302625320103521412221620308817212415EthanolCementNGPowerCoalPowerHydrogenNGProcessingChemicals,Fuels,andPlasticsAmmonia/FertilizerOthersOperationalOperationalandannounced1Includesthoseexpectedtohavecommissioningin2022Source:BloombergNewEnergyFinance,“2022CCUSMarketOutlook"11Includingwhetherafacilitymustaddmultiplecaptureunitsorcanuseasinglecaptureunit12Somemajordifferencesbetweensourcesincludefinancingassumptions,first-of-a-kind(FOAK)versusnth-of-a-kind(NOAK)projections,andassumedCO2purityoftheexhauststream.Whileestimatedcostsmayvarybetweensources,theorderoflow-tohigh-cost-of-captureindustriestendstobethesameacrosstheliterature.10PathwaystoCommercialLiftoff:CarbonManagementFigure6:CapturedrivesthemajorityofunitcostsforCCUSandrepresentsthemajorityofcostreductionpotentialCostsandcharacteristicsalsovarysignificantlybycapturetechnology.Amine-basedchemicalabsorptionprocessesarethemostcommonandmaturecapturetechnology.Othercapturetechnologies(e.g.,advancedsolvents,membranes,cryogenic,waterleansolvents,andsolidsorbents)andalternateprocesses(e.g.,Oxy-combustion,theAllamcycle)areindevelopmentandmayrealizefuturecostadvantages.13,xixInamine-basedprocesses,fluegaspassesthroughanaminesolvent,whichbindstheCO2molecule.ThisCO2-richsolventisheatedinaregenerationunittoreleasetheCO2fromthesolvent.ThepurifiedCO2streamiscompressedandtransportedforstorageorend-useandthereleasedsolventsarerecycledtoagaincaptureCO2fromfluegas.ModularizingCCUSequipmentforaminesolventscanspeeddeploymentbyminimizingupfrontengineeringdesignrequirementsandbyleveragingasimplifiedproductionprocess.xxAsthecostofcapturefalls—eitherthroughexperienceandstandardizationinprojectdevelopmentandfinanceorefficiencyimprovementsinalreadycommercialtechnologies—point-sourceemissionsbecomemoreeconomicallyviabletocapture.1ReferstoCO2capturebroadlyacrosssectorsexaminedinthisreport(seeFigure1);CostsdrawnfromEFIFoundation,“TurningCCSProjectsinHeavyIndustry&PowerintoBlueChipFinancialInvestments”2Generalizedacrosssectors.Individualsectorswillhavesector-specificcostreductions3ApproximatecostsbasedonpublishedstudiesbytheEuropeanZeroEmissionTechnologyandInnovationPlatform,theNationalPetroleumCouncil,andGCCSIprocesssimulationfora30yearassetlife.AllcostshavebeenconvertedtoaU.S.GulfCoastbasis.Lowerendofpipelinecostassumes20MTPA,180kmonshorepipeline.Upperendofpipelinecostassumes1MTPA,300kmonshorepipeline.4Utilizationroutesalsoexistincluding,butnotlimitedto,conversionofCO2intosynfuelsorplasticsandutilizationofCO2inEORandbuildingmaterials5Figurerepresentsalevelizedcostofsitescreening,siteselection,permitting&construction,operations,andsiteclosureandpost-injectionsitecare6ModularizationwillbeamorecriticaldriverforcertaintechnologytypesthanforothersNote:SupplychainriskandtechnicalriskacrosstheCCSvaluechainhasbeenfoundtobelow(DOECCSSupplyChainDeepDiveAssessment)Source:CapturecostsfromEFIFoundation,“TurningCCSProjectsinHeavyIndustry&PowerintoBlueChipFinancialInvestments”;TransportcostsfromGlobalCCSInstitute,“TechnologyReadinessandCostsofCCS’;StoragecostsfromBNEF13Forexample,membraneseparationusesapolymericorinorganicsubstancewithhighCO2selectivityandhasbeendeployedcommerciallyinsyngasandbiogas.PhysicaladsorptionusesasolidmaterialtocaptureCO2andthenincreasestemperatureorpressuretoreleasetheadsorbedCO2.CryogeniccarboncaptureinvolvescoolingthegasstreamtoproducesolidCO2thatcanthenbeseparatedfromtherestofthegas,pressurized,andbroughtbackintotheliquidphase.CO2capture1CO2transport(Pipeline)CO2storage4Currentcosts,$/tonneCostreductionspossible?2LargereductionsModeratereductionsSmallreductionsCurrentcostreductionleversEconomiesofscale,targetinglargestcapturesourcesModularizationandstandardization6LearningbydoingTechnologyinnovationsfornovelcapturetechnologiesEconomiesofscale(e.g.,increasingdiameterandaddedcompression),aggregatingvariousCO2sourcesinahubSitingclosetoreservoirstominimizedistanceUtilizationofexistingrights-of-waySitingonwell-characterizedsitewithexistinginfrastructureandgoodmonitorabilityEconomiesofscale,leveraginglargereservoircapacitiesReductionofMMVcostsbyR&Dandlearningbydoing25-17515-2535-155LowHighCriticaldriversOtherdrivers11PathwaystoCommercialLiftoff:CarbonManagementSection2.a.iiCarbonDioxideRemoval(CDR)CDRreferstoawidespectrumofactivitiesthatremovecarbondioxidefromtheatmosphere.ThesecanrangefromplantingtreesthattakeinCO2astheygrowtodirectaircapture(DAC)facilitiesthatfunctionlikeCCUSbuttreatambientairinsteadoffluegas.ThepermanenceofdifferentCDRapproachesvarywidely:whiletreesmayoffercenturiesofdurablestorageundersomeconditions,theyaresubjecttorisksofreversal,suchasinfections,infestations,wildfires,andlogging;whereasgeologicstorageisexpectedtolast>10,000years.xxiThissectionfocusesonthehigher-permanenceremovalswithmoreestablished(butstillnascent)approachesformonitoring,reporting,andverification(MRV)ofremovals.CreditsforemissionsstoredbyCDRtechnologiescanbesoldinthevoluntarycarbonmarkets(VCM)tohelpcompaniesorotherinstitutionsreachtheiremissionsreductionsgoals.Companiescansubtracttheseremovalcreditsagainstanyemissionstheydonotreducedirectly.With~40pilot-scaleprojectsand~100thousandtonnesperyear(KTPA)ofglobalcapacity,technologicalCDRhasseenlimitedcommercialdeploymentto-date(Figure7.).xxiiManyplannedprojectsareDACdemonstrationspromptedbyBILfunding,IRAincentives,andthewillingnessofafewcreditbuyerstopayhighprices.Manyresearchersexpectpoliciessuchasacarbontax,large-scalegovernmentprocurementofCDR,orregulatorymandateswillbeneededtoreachrelevantscale.TheFY2023CongressionalOmnibusbudgetreportdirectsDOEto“establishacompetitivepurchasingpilotprogramforthepurchaseofcarbondioxideremovedfromtheatmosphere.”xxiiiThelevelizedcostsoftheCDRapproachesdiscussedinthisreportaregenerallyhigherthanforpoint-sourceCCUS,duetotherelativelydiluteconcentrationofatmosphericCO2.14InvestmentsinR&D,scale-up,andoperationalefficienciesareneededtolowercostsandprovidecertaintyforCDRtechnologyandprojectdevelopers(Figure8).DeterminingthepreciseclimatebenefitsofsomeCDRtechnologiescanbechallenging.Lifecycleassessment(LCA)andMRVofremovalsofvariousCDRtechnologieswillrequirefurthervalidationandstandardizationtoensurepropermeasurementofremovedcarbon.Directaircapture(DAC)TheDACprocessintakesorpassivelyexposesair,whichreactsinacontactortobindCO2.TheCO2isthenseparatedfromtheDACequipment,compressed,transported,andstoredorused.Thecaptureagentisthenregenerated,usuallywithheat,whichrequiresasignificantenergysupply,beforeitisthenrecycledforadditionalcapture.Today,solidsorbentandliquidsolventtechnologieshaveseenthemostdemonstrationactivity,thoughbothapproachesarestillnascent.Whileliquidsolventsareexpectedtobelower-costtodaycomparedtosolidsorbents,itisuncertainwhichtechnologywillbelower-costasmoreprojectsdevelop.15,xxivOtherregenerationprocessesandcapturematerials(e.g.,electric-andmoisture-swingsolidsorbents,andmembraneprocesses)arealsoemerging,withsomepotentiallyoverlappingwithenhancedmineralization(seebelow)16.BiomasswithCarbonRemovalandStorage(BiCRS)BiCRSreferstousingbiomass(i.e.,plantmatter)asacapturevehiclesinceplantstakeinCO2astheygrow.17LikeotherCDRapproaches,BiCRSisinitsnascency.ThetwomostprominentBiCRSprocessessofarareBECCS(bioenergy+carboncapture,utilization,andstorage)andbiochar/bio-oil.Biomass-to-hydrogenpresentsanotherBiCRSpathwayandcanincludebiomassgasificationorfastpyrolysistoproducehydrogenwithcaptureandstorage,potentiallyresultinginnet-CO2removalonalifecyclebasis,dependingonthefeedstockproductionandprocessingemissions.xxvBECCSreferstousingbiomasstoproduceheat,power,fuels,orotherproductsandthencapturingandusingorstoringthepoint-sourceemissions.Biocharandbio-oilarecarbon-richsolidsandliquidsthatareproducedbydecomposingbiomassathightemperatures(i.e.,pyrolysis.)Whilebio-oilwithgeologicalstoragehashighdurability,biochar’sstoragedurabilityismoreuncertain,anddependsonusecaseandelementalcomposition.xxviAvailabilityandsourcingoflow-GHGbiomassorbiomassthatyieldsanet-GHGreductionarekeychallengesforBiCRSscale-up.14TheCO2-purityofthefluegasstreamisrepresentativeofthosefrompowerplantsandindustrialinstallations(IPCCAR6WGIII12.3.1.1[2022]).15Liquidsolventcostsarecurrentlyestimatedtobe~$170–250pertonneCO2comparedtosolidsorbentcostsof~$365–740pertonneCO2;2050costestimatesare~$70–125and~$65–145pertonneCO2,respectively(CoalitionforNegativeEmissions)16Forexample,sometechnologiesutilizelimestone-basedsolidstoadsorbCO2fromairandregenerate.Ingeneral,DACwillrefertotechnology-basedCO2capturefromair,evenifthesorbentissimilartothoseusedinex-situenhancedmineralization17BiCRSdoesnotincludeso-called“nature-basedsolutions”likeafforestationorreforestation12PathwaystoCommercialLiftoff:CarbonManagementMineralization(alsoknownasenhancedmineralization)MineralizationisanaturalprocesswhereCO2reactswithanalkalinefeedstock(e.g.,containingCa2+orMg2+)toproduceacarbonate,creatingastable,solidmineral.Potentialfeedstockscouldbealkalinity-richgeologicformations(e.g.,basaltandperidotite)orinalkalineindustrialwastes(e.g.,miningwastes,steelmakingslag).Themineralizationprocesshasthreeprimaryvariations:(1)in-situ,whereCO2-richfluidsareinjectedintosubsurfacealkalineminerals,(2)ex-situ,wherebyalkalinefeedstocksarereactedwithCO2inreactorsathightemperatureand/orpressure,and(3)surficial,inwhichalkalinematerialisreactedwithCO2atambientconditionsorviaspargingofhigh-purityCO2atlowpressure.xxviiIn-situmineralizationcanbepairedwithDACforpermanentstorage.CertaincomponentsofmineralizationcanalsobeusedinDACtechnologiesandthereissomeuncertaintyintechnologyclassification.Forexample,sometechnologydevelopersarecommercializingpassivemineralizationDACtechnologiesthatrepeatedlyproducecalciumcarbonatebyexposingcalciumoxidetoatmosphericCO2thenemployrenewableheattoproduceahighpurityCO2streamandaregeneratedcalciumoxidethatcanagaincaptureCO2.xxviii~5K~4K~65KLabandpilotscale77M25M1.9M+~8MEarlierscaleprojects#ofprojectsTotalcapacity,TPACO2Permanence,yearsCurrentcapacity7Announcedcapacity(asofSept2022)6,7#ofprojectsTotalcapacity,TPACO2CDRtechnologyMinera-lizationDAC3~70+DAC1>10,000112+BECCS2>10,000N/AN/AMineralization(ex-situ)>10,000~354~40Biochar/bio-oilUncertain;dependsonuse-case,productionprocess;andotherfactors,butcenturies3N/A3Biomass-to-hydrogen5>10,000withgeologicalstorageBiCRSLimitedpubliclyavailableinformationSource:CDRcompanywebsites,“DirectAirCapture2022”(IEA2022,publicannouncementsasofJuly2022);LNNL:GettingtoNeutral:OptionsforNegativeCarbonEmissionsinCalifornia(2020)1DACannouncedprojectsinclude1PointFive's701MTPADACfacilitiesby2035andCarbonCapture's5MTPAProjectBisonby20302BECCSannouncementsinclude15MtofbiogenicCO2fromheatandpowerplants,fivecementplantswithplanstointegratebiomassfeedstockintheclinkerproductionprocessandretrofitCCUS,andtwohydrogenfacilitiestorunpartlyorfullyonbiomass3Biocharpermanencyestimatesareinthedecadestocenturiestimescale(IPCCAR6WGIII(2022)).Biocharmaysequesteranestimated37%after1000yearswithestimatedpermanencerangingfromafewdecadestoseveralcenturies(Fuss2018)).Biocharasasoilamendmentmaysequestercarbonforanywherefrom~8–3,500years(“ASystematicReviewofBiocharResearch,withaFocusonItsStabilityinsituandItsPromiseasaClimateMitigationStrategy”(Gurwick2013)).Bio-oilcarboncouldbesequesteredfor>1,000yearsindepletedoilwells(“Pyrogeniccarboncaptureandstorage”(Schmidt2018),“Biogeochemicalpotentialofbiomasspyrolysissystemsforlimitingglobalwarmingto1.5°C”(Werner2018))4Primarilybiocharincumbentswhohavenothistoricallyfocusedoncarboncreditproduction5RoutesincludegasificationandfastpyrolysistoH2.PlannedprojectsincludeChevronandCleanEnergySystemsbiomasstoH2plants6Announcedprojecttimelinevariesbetween2024to20357CapacityissubjecttoLCAassumptionsonnet-GHGemissionsandwilldifferbyCDRtechnologypathwayandspecifictechnologiesFigure7:TheremovalcapacityoftechnologicalapproachestoCDRisexpectedtoincrease100xwithannouncedcapacity13PathwaystoCommercialLiftoff:CarbonManagementCurrentcostsandmajorcostleversbyCDRtechnology,$/tonneCO2capturedFigure8:SelectCDRtechnologies’costsarecurrentlyhighbutcanbeloweredthrougheconomiesofscale,modularizationandotherlevers60090-120Liquidsolvent1Solidsorbent1Mineralization(ex-situ)5BECCS(power)2Biochar3Bio-oil4225-355330-600125-28580-600HighTotalOpexCapex1CostsfromNETL:Directaircapturesolventandsorbentstudies;UpperboundofsolidsorbentfromClimeworks2018,alsocitedin“Areviewofdirectaircapture(DAC):scalingupcommercialtechnologiesandinnovatingforthefuture"(McQueen2021)2CostestimatesfromCoalitionforNegativeEmissionsforfirst-of-a-kindBECCSforpowerwithmodifiedfinancingcostssameasabove.LowrangesofpurchaseofbiomassprocessedfeedstockandbiomasstransporttakenfromFAOU.S.biomasscostestimatesratherthanCoalitionforNegativeEmissions,whichhashigherestimatesapplicabletoaUK-basedplant(“EconomicanalysisofwoodybiomasssupplychaininMaine(Whalley2017))3ICEF“BiomassCarbonRemovalandStorage(BiCRS)Roadmap”(2021)4CostforFOAKplantproducingbio-oilfromcellulosicbiomassheatedto500Cwithoutoxygen.FromCharmIndustrial“CarbonRemoval:PuttingOilBackUnderground”(2021)5Costsforexsitumineralizationwithwollastonite,olivine-rich,andserpentine-richtailingsusingheatandconcentratedCO2fromKelemenP,BensonSM,PilorgéH,PsarrasPandWilcoxJ(2019)AnOverviewoftheStatusandChallengesofCO2StorageinMineralsandGeologicalFormations.Front.Clim.1:9.doi:10.3389/fclim.2019.00009CDRtechnologyMajorcostreductionleversDACBiCRSMinera-lizationCurrentcosts,$/tonneOtherdriversCriticaldriversEnergyefficientdesignandbetterintegrationofaminesystemsScalingcapturedeploymenttolargerplantsandstandardizationCarbonmineralizationprocessimprovement,creationofusableproductstooffsethighcostsR&DandmanufacturingefficiencyofmodularcomponentsReductioninoperatingandmaintenancecoststhroughlearningbydoingR&DtodecreasecostsofpyrolyzersandmajornascenttechnologyLowcostbiomasssourcesLowcostbiomasssourcesEconomiesofscalefrommaximizimgequipmentsizing;learningbydoingEconomiesofscalefrommaximizimgequipmentsizing;learningbydoingR&Dinsolvents,systemsandenergymanagement;lowcostenergyCO2transportcost,1$/tonneCO2Globalcapacity,MTPAMostlyusedforEORintheU.S.,Canada,Brazil,China,theNetherlandsandoffshoreNorwaySmall-scalefoodgradeshipping;Emerginglarger-scaleapplications(e.g.,NorthernLights)SmallscaledistributionofCO2toendmarkets,butnotimplementedatscaleCurrentstateMainapplicationsMature,atscaleMatureinsmallscale;in-developmentatlargescaleMatureinsmallscale;in-developmentatlargescalePipeline2Ships335-60Railandtrucking45-2514-25~370~2Source:GlobalCCSInstitute,Perezetal.(2012),Technic-EconomicalEvaluationofCO2TransportinanAdsorbedPhase,LowCarbonEconomy1Costrangesapproximatebasedonpublishedstudies;costsastrongfunctionofdistanceandpressureatwhichCO2istransported2ApproximatecostsbasedonpublishedstudiesbytheEuropeanZeroEmissionTechnologyandInnovationPlatform,theNationalPetroleumCouncil,andGCCSIprocesssimulationfora30-yearassetlife.AllcostshavebeenconvertedtoaU.S.GulfCoastbasis.Lowerendofpipelinecostassumes20MTPA,180kmonshorepipeline.Upperendofpipelinecostassumes1MTPA,300kmonshorepipeline.3Approximatecostbasedon20MTPAatadistanceof180kmonthelow-endand2.5MTPAcapacityat1,500kmonthehighend.AllcostshavebeenconvertedtoUSGulfCoastbasis.4LowendrepresentsliquidCO2transportviarailfor250km,high-endrepresentsadsorbedCO2transported300kmviatruckFigure9:Pipelinesarecurrentlythemostused,leastexpensive,andmostmatureCO2transportationtechnology,butothermodeswillbeusedforcertainapplicationsSection2.a.iiiTransportTransportnetworksconnectcapturesiteswithfinalstorageorutilizationsites.CO2willlikelycontinuetobetransportedprimarilybypipelineforlargevolumes;rail,trucks,ships,andbargesmayalsobeusedforspecificapplications,albeitatahighercostversuslarge-scalepipelinetransport(Figure9.).14PathwaystoCommercialLiftoff:CarbonManagementCO2PipelinesCO2pipelinesarethemostmature,andoftenthemostcost-effectiveCO2transporttechnologyforhighvolumes(~$5–25pertonne18)andwilllikelyformthebackboneofCO2transportnetworks.TheU.S.hasmorethan80%oftheworld’sCO2pipelines,withanetworkspanningroughly5,000miles,mostlyforenhancedoilrecovery(EOR).xxixSinceexistingpipelineslargelyconnectnaturallyexistingCO2domeswithactiveoilfields,newpipelinerouteswillbeneededtolinkemissionssourcestogeologicalstorage.19CO2pipelinesneartheGulfofMexicoandotherareascanberepurposedtodelivercapturedCO2emissionsinsteadofgeologicCO2sourcedfromnaturaldomes.Recently,newpipelineprojectsintheMidwestareseekingtoaggregatesmall,discretesourcesoflow-costCO2fromethanolplants.20,xxxToday,pipelinesitingislargelyregulatedatthestatelevel.Statesapproveanyrequiredpermitsandanyuseofeminentdomaintoacquirethenecessaryrightsofway(RoW)forpipelinedevelopment.Twofederalbodiesthatcouldbeequippedtoexercisejurisdictionoversiting—theFederalEnergyRegulatoryCommission(FERC)andtheSurfaceTransportationBoard(STB)—havenotcurrentlybeendelegatedjurisdictionoversitingofCO2pipelinesbyCongress,leavingauthoritytostates.xxxiTheDOT’sPipelineandHazardousMaterialsSafetyAdministration(PHMSA)regulatesCO2pipelinesafetyandiscurrentlyupdatingitsregulationsinthewakeofa2020CO2pipelinerupture.xxxiiSomeongoingCO2pipelinedevelopmentshavefacedobjectionsfromsomelandownersalongtheirproposedroutes.Theselandownershaveraisedconcernsaboutcompensation,safety,andotherimpacts(e.g.,cropproductivity).Developershaveattemptedtoaddresstheseconcernsandmeaningfultwo-wayengagementwithhostcommunitiescanhelpaddressormitigatetheseissues.SomepipelinecompanieshavepubliclyexploredthepossibilityofclassifyingCO2pipelinesascommoncarriers,whichcarryeminentdomainrightsandcertainserviceprovisionrequirementsinsomejurisdictions.21,xxxiiiOtherCO2transportmethodsBuildingoutpipelinenetworksisacriticalenablerforU.S.carbonmanagementmarkets,asCO2transportbyrailandtruckaregenerallymoreexpensive($35–60pertonne22).Still,rail,truck,andshippingmaybeimportantforcertainapplicationsinareaswherepipelineaccessisnotfeasible.CO2transportbyshiprequiresaloadingfacilityandtemporarystorageonland.23,xxxivThismethodiscurrentlyusedonasmallscaleinEuropeforfood-qualityCO2.Expandedshippingcouldenableoffshorehub-and-spokestoragenetworks,especiallyinglobalhubsthatareanchorednearshippingchannelsorports(e.g.,theNorthernLightsprojectinEurope).24Forecastspredictthefutureloadsizewillvarybetween2,000–50,000tonnesofCO2pershipment,leveragingliquifiednaturalgas(LNG)experienceandinfrastructure.xxxv18Dependingonpipelinewidth,distance,landownershipandcompensation,aswellasothermaintenanceandconstructionconsiderations.19CO2domesarenaturallyoccurringCO2reservoirsintentionallyproducedtobesenttooilfieldsorforotherCO2uses20ProposedprojectsbySummit,NavigatorandADM-Wolfwouldeachcarry~10+MTPA.Emergingprojects(e.g.,Tallgrass)arealsoproposingtheconversionofnaturalgaspipelinestoCO2,whichcouldpotentiallyusesomeofthe320,000milesofnaturalgastransmissionanddistributionacrosstheU.S.21Commoncarrierisusedtodefinepipelinethatservicesanythirdpartyunderastandardsetofterms,ratherthanapipelinethatisforprivateuseoronlyservesselectparties;Eminentdomainreferstothegovernment’sabilitytoconvertprivatepropertyintopublicuse,compensatingtheowneratfairmarketvalue(e.g.,rightsofway[RoWs]toallowtheconstructionofpipelines);Commoncarriertransportation22Thesecostsareofferedasapproximateaveragesandindividualprojecteconomicswilldependonthedistancetoaccessibletransportnetworks(waterwaysorrailways),thedistancetostorageorconversionsites,andthecapacityofthetransportingvehicle(andaccordinglynumberoftripsrequired).23ThisprocessislikethoseseeninLNGprojects,whichmayindicateasimilarscale-uppotentialandtrajectory24LiquidCO2carriers,with1,000-2,000tonnespership,transportedfromlargepointsourcestocoastaldistributionterminals15PathwaystoCommercialLiftoff:CarbonManagementSection2.a.ivStorageTheU.S.hasabundantstorageresourcesthataremorethansufficienttomeetcarbonmanagementneeds.Therearethreeprimaryoptionsforthelong-termstorageofcapturedCO2:geologicsalineaquiferstorage,depletedoilandgasreservoirs,ormineralization(e.g.,inultramaficandmaficrockssuchasbasalt).Table1:25NETLandDOE:CarbonAtlasV—estimatesrangefrom2,379–21,633billionmetrictonnes.ThehighestscenariosforcarbonmanagementprojecttheU.S.injecting~1.8billionmetrictonnesannually.NorthAmericahassignificantCO2geologicstorageresources,estimatedtobesufficienttoreachitsnetzerogoals.xxxviStorageoptionStoragepotential,billiontonnesLowMediumHighSalineaquifersxxxvii2,3798,32821,633Depletedoilandgasreservoirsxxxviii186205232MineralizationGlobalestimates:2,500–25,000billiontonnesxxxixProjectdevelopersandotherindustryexpertsbelievethatmostoftheCO2storedintheU.S.willusesalineaquifers.Thischoiceisdrivenbythelargepotentialcapacityacrossbothonshoreandoffshoresalineaquifersandstrongpublicandinvestoracceptanceandtowardstorageusingsalineaquifersrelativetootheroptions.CapacityestimatesareshowninTable1.NorthAmericapossesses~2,400–21,000billiontonnesofCO2storageresources—enoughtostorehundredsorthousandsofyearsofcapturedCO2emissions.25SalineaquifersarewidelydispersedacrosstheU.S.,thoughspecificsitesrequirecharacterizationandotherdevelopmentworktobetterunderstandtheirpotentialcommercialattractiveness.16CarbonSAFEPhaseIII:SiteCharacterizationandPermittingCarbonSAFEPhaseII:Storagecomplexfeasibilityprojects145691078322SanJuanBasinCarbonSAFE:EnsuringsafesubsurfacestorageofCO2insalinereservoir,NewMexicoInstituteofMiningandTechnology3NorthDakotaCarbonSAFEPhaseIII:SiteCharacterizationandPermittingUniversityofNorthDakotaEnergyandEnvironmentalResearchcenter(EERC)5IntegratedMidcontinentStackedCarbonStorageHub:StoragecomplexfeasibilityassessmentBatelleMemorialInstitute1Commercial-scalecarbonstoragecomplexfeasibilitystudyatDryForkStation,WyomingUniversityofWyoming8AcceleratingCCUSatDryForkStation,WyomingUniversityofWyoming9WabashcarbonSAFEUniversityofIllinois10CarbonSAFEIllinoisMaconCountryUniversityofIllinois7IllinoisStorageCorridorTheBoardofTrusteesoftheUniversityofIllinois4NorthDakotaintegratedcarbonstoragecomplexfeasibilitystudyTheEnergyandEnvironmentalResearchCenter6EstablishinganearlyCO2storagecomplexinKemperCounty,Mississippi:ProjectECO2SSouthernStatesEnergyBoardGeologicstoragesitedevelopmentsupportedthroughDOE’sCarbonSAFEinitiativeFigure10:DOEhelpeddevelopmultipleCCUSsitesthroughtheCarbonSAFEstoragesitecharacterizationandCO2captureassessmentprojectsSource:ExtractedfromNETLwebsite-https://netl.doe.gov/carbon-management/carbon-storage/carbonsafePathwaystoCommercialLiftoff:CarbonManagementEstablishingstorageresourcesfordevelopmentrequiresdrillingexplorationwells,takingseismicimagingdataofthereservoirandperformingengineeringstudies.Thesestepscostmillionsofdollarsandtake1–3yearstocomplete.26DOE’sCarbonSAFEInitiativeseekstoacceleratethisprocessbysupportingtheexplorationofstoragesitesacrossatleastsevenregionswithintheU.S.Tensiteswithatleast50MTofcapacityhaveundergoneeitherfeasibilityorcharacterizationstudies(Figure10.).TheCarbonSAFEprogramissettoexpandsignificantlywith$2.5billioninadditionalfundingforstorageprojectsfromtheBipartisanInfrastructureLaw.xlFurthercharacterizationbyotherdevelopers,oftenwithDOEfunding,hasdemonstratedanadditionalpotentialofatleast300MTfromatleast11sites.27,xliAdditionally,DOE’sRegionalCarbonSequestrationPartnershipsinclude7regionsacrosstheU.S.andfacilitatecharacterization,validation,anddevelopmentphases.ThePartnershipshaveproducedtheNationalCarbonStorageAtlases,contributedtoaseriesofBestPracticeManualsonsequestrationapproaches,andcollectivelyenabledover12MTofCO2storage.xliiProjectsfundedthroughBipartisanInfrastructureLawProgramscouldunlockmorethan350MTofadditionalstoragecapacity,althoughnotallwillbecommerciallyattractivetodevelop.xliiiMoreofthesesitesarerequiredtosatisfythe400-1,800MTPAcapacitynecessaryforanet-zeroeconomy.xliv,28Thereisnoshortageinphysicalstorageresources,butpermittingtimelinesforstoragesitesarefrequentlymentionedasapotentialbottleneckbyinvestorsanddevelopers.StoragewellsarepermittedthroughtheUndergroundInjectionControlProgram’s(UIC)ClassVIrequirementsadministeredbyEPAorimplementedbyapproved“primacy”states,territories,ortribes.TheUICprogramisdesignedtoensurethatinjectedCO2doesnotimpactundergroundsourcesofdrinkingwaterorotherwiseimpacthumanhealthandtheenvironment.29,xlvEPAhasapprovedsixClassVIwellssofar,twoofwhichareinoperation.ForthefirstfourClassVIwells,EPAissuedthepermitswithintwoyears;Thepermitsfortheremainingtwowellstookbetween3and6years.30EPAhaspubliclyannouncedthat,movingforward,itwillstrivetopermitwellsintwoyearsandEPAhasdevelopedaseriesoftoolstohelpstreamlinethepermittingprocess.xlvi,xlviiEPAcanapproveStates,tribesorterritoriestobetheprimaryimplementationauthorityforClassVIwellpermittingresponsibilities;approvedstatesarecommonlyreferredtoas“primacystates”ThetwowellsinNorthDakotapermittedunderClassVIprimacytook8–10months.31,xlviiWyomingalsohasprimacyandhastwoactiveClassVIpermitapplications.Texas,Louisiana,Arizona,andWestVirginiaarecurrentlyintheClassVIpre-applicationorapplicationprocesstoreceiveprimacyfromEPA.xlixFPennsylvaniaisalsoplanningtoapplyforClassVIprimacy.EPAexpectstocompleteitsevaluationofLouisiana’sClassVIapplicationsandrequestpubliccommentonthisevaluationinMay2023.liAsaresultofBILfunding,EPArecentlyannouncedagrantprogramforstates,Tribes,andterritoriestodefrayexpensesrelatedtoestablishingandoperatingaClassVIUICprogram.AsaconditionofreceivingfundingfornewClassVIprograms,statesmustincorporateEnvironmentalJusticeandequityconsiderationsintotheirstatepermittingprograms.liiCurrently,fouroperationalsites—withtotalinitialcapacityof~30MT—havereceivedClassVIpermitsinNorthDakotaandIllinois.32Over60ClassVIapplicationsarecurrentlypendingatEPAwithadditionalapplicationssubmittedinstateswithprimacy.liiiPendingapplicationscouldexpandcapacityby80MTormore.33Insomestates,developersfacelegalambiguityaroundporespaceownership(i.e.,whoownsthespacewhereCO2isinjected),requiringadditionalandearlyduediligence.livInstateswithoutcomprehensiveporespaceregulations,thelackoflegalprecedentorclearlawcreatesuncertaintyregardingownershipanditsimpactonfuturelegalchallenges.lvMostcommonly,thisisanissueofsplitestatesonlandswherethesurfacerightownerdoesnotalsoownthemineralrightandtheprimacyofmineralrightsrelativetoporespacerightsareunsettled.lviThisisalsoanissuethatneedstobeaddressedwithrespecttofederallands,particularlyinregionswheremineralrightsareownedbythefederalgovernment,butthesurfacerightownerorleasemaybedifferent.In2022,theBureauofLandManagementissuedaninstructionmemorandumclarifyingRoWsforgeologicsequestrationofCO2.lviiIn2021,theBILprovidedtheBureauofOceanEnergyManagementwiththeauthoritytograntleases,RoWs,andeasementsforthesubsurfacestorageofCO2.lviii26Variesbydeveloperandreservoir.2022CCUSInstituteReport27Storagepotentialisimpactedbygeologicalfeatures(e.g.,thickness,boundariesandporosity),rockquality(e.g.,permeability,pressure),andotherfactors(e.g.,depth,localseismicity,previousdrilling,passagethroughfreshwateraquifers[especiallysingle-sourceUSDWs],andpipelinerightofway).28Assuming25yearsofcaptureandstoragelifetime29Itincludesrequirementsforsitecharacterization,wellconstruction,operation,monitoring,financialresponsibility(includingduringpost-injectioncare)andreporting/record-keeping30Factorsspecifictoeachindividualapplicationcansignificantlyimpacthowlongitwilltaketoissueapermit.Individualsiteconditions,communityfeedback,andthecompletenessorqualityoftheapplicationmayrequireadditionaltime.Forexample,EPAmaynotifyapplicantsofdeficienciesintheapplicationormakeRequestsforAdditionalInformation.Theresponsivenessandcompletenessofapplicants’responseswillultimatelydictatethepermittingtimeline.31DifferingdefinitionsofapplicationsubmissionandapprovalbetweenstateandEPAClassVIprocessesmakedirectcomparisonsdifficult.32Oneothersite(FutureGen)receivedClassVIapproval,butdidnotproceed33BasedontheClassIVWellsPermittedbyEPA,theDMRandtheWyomingDEQ17PathwaystoCommercialLiftoff:CarbonManagementSection2.a.vEnhancedOilRecovery(EOR)storageHistorically,capturedCO2hasbeenprimarilyinjectedinoilfieldsforEOR.CO2-EOR,injectingfrombothnaturallyoccurringandanthropogenicsources,wasresponsibleforproducingroughly300,000barrelsofoilperdayintheUSin2019.34,lixNearlyalloftheinjectedCO2ultimatelyremainsgeologicallystoredundergroundwhiletheoilinthereservoirisdisplacedandextractedforrefining.lxCurrently,themajorityoftheCO2supplyforEORoperationsistakenfromnaturallyoccurringreservoirs,suchasCO2domes.lxi,lxii,lxiiiAsindustrialandatmosphericcapturecapacityexpands,capturedCO2thatwouldhavegoneintotheatmospherecoulddisplacenaturallyoccurringCO2inEORoperations.UsinganthropogenicemissionsforEORcanproduceoilwithlowerlifecyclecarbonemissionsbecauseofthecarboninitiallystoredtoproduceit.LCAperformancewillvaryoverthelifetimeofawellandbetweenwellsbasedonwell-specificpracticesandcharacteristics,butsomeproposearuleofthumbof~40%lowerlifecyclecarbonemissionsperbarrelofoilproduced.lxiv,lxvSection2.a.viUtilizationCarbonutilizationdescribesthecreationofcommercialproductsorcommoditiesforconsumptionthroughtheconversionorpermanentcontainmentofcapturedcarbonwitheitherCO2orcarbonmonoxide(CO)asfeedstocks.Insomecases,conversioncanserveasanalternativetogeologicstorageforcapturedCO2,addingadditionalcapacityandeconomicvalueandoftenreplacingincumbentmaterialswhicharemoreemissions-intensive(Table2.).3534ThisprocesshasmostlybeenusedinthePermianbasin,largelyduetofavorablegeologyandaccessible,naturalsourcesofCO2(NETL:CO2EnhancedOilRecovery:UntappedDomesticEnergySupplyandLong-TermCarbonStorageSolution).35Ifutilizationresultsinre-releaseofCO2(e.g.,inbeveragesorfuels)thenthereisnodirectabatementpotential.NOTEXHAUSTIVEUtilizationCaseKeytechnologies1BuildingmaterialsCO2-curedcement:injectsCO2intofreshready-mixcementorinpre-castconcreteCO2-basedaggregates:metaloxidesareextractedandcarbonatedusingCO2fromfluegas,anddepositedontoasubstratecreatingaggregatethatiscomposedofcarbonatesClinkerreplacement:substitutionoflimestonewithalkalinematerialslikeflyashfollowedbycarbonationwithCO22Plastics,chemicals,&newmaterialsCO2-derivedpolyethylenecarbonates(PEC)polyolsforheatinsulationfoams,transparentpolycarbonateandpolyurethaneplasticsCO2-derivedpolypropylenecarbonate(PPC)andpolyethylenecarbonates(PEC)polyolsforpolyurethaneplastics3FuelsElectrolysis:CO2andwaterconvertedtosyngasthroughco-electrolysistoproducesyntheticfuel(e.g.,diesel)throughfurtherprocesses(e.g.,Fischer–Tropschprocesses)Thermo-catalysis:liquidfuels(gasoline,dieseletc.)aresynthesizedfromCO2andhydrogenFischer-Tropsch:ConversionofsyngasintoliquidhydrocarbonsthroughacatalyticchemicalreactionCOconversion:Non-Fischer-TropschconversionofgasescontainingCOintoliquidfuelsandchemicalsTable2:CO2canbeconvertedtonewmaterialslikebuildingmaterials,plastics,andsynfuels18PathwaystoCommercialLiftoff:CarbonManagementCO2demandforutilization,excludingureaproduction,was~20-30MTPAgloballyin2019.lxviHowever,newcommercialpathwayshaveemergedthatuseconversiontocreatefuels,chemicals,andbuildingmaterials.Formanyutilizationapplications,economicsarehighlyuncertainandwilldependoncustomerwillingnesstopayabovethesubsidizedcosttoproduce.Carbonutilizationprocessesvaryintechnologyreadiness,marketdynamics,andpotentialforlong-termCO2storagepermanence.Forexample,buildingmaterialsproducedviaCO2mineralizationpresentthepotentialforpermanentCO2storage,whileproducingjetfuelviaFischer-TropschsynthesisorCOconversionwouldhavenolong-termcarbonstoragepotential(asCO2isproducedandre-emitteduponfuelcombustion).However,theemissionsabatementfromdisplacementofincumbentfossil-basedjetfuelissufficientlyhightopresentanargumentforcontinueddevelopmentofthesecarbonconversionpathways.lxviiAtscale,utilizationisexpectedtoaccountforonlyafractionofthetotalcarbonemissionscaptured—therestmustbestored.Whilesmallrelativetostorage,NorthAmerica'sCO2demandforutilizationisprojectedtogrowto~40MTPAby2030and~100–250MTPAby2050.36,lxviiiDOEhassupportedadiverseportfolioofcarbonconversionprocesses,includingcatalyticconversionofcarbonoxidestofuelsandchemicals,uptakeinalgaeandbioproducts,andmineralizationforproductionofinorganicmaterials.lxvixSection2.bCurrentregulationandpoliciessupportingCCUSandCDRdevelopmentSeveralpoliciessupportthebuildoutofCCUSandCDRinfrastructureintheU.S.InflationReductionAct(IRA)–45QThe45Qtaxcreditisthelargestandmostcertainincentiveforcarbonmanagementintheworld.Bysettingareliablevalueforgeologicallystoredorutilizedcarbon,the45Qcreditprovidesaconsistent,performance-basedrevenuesourcethatdeveloperscanusetoevaluatepotentialprojects.AsamendedbytheIRA,the45Qcreditpays$85perton37;requiresthatqualifiedprojectscommenceconstructionbytheendof2032;andallowsthetaxpayertoclaimthecreditfor12yearsonceaprojectisplacedinservice(Figure11).IfaCCUSdevelopercancaptureandstorecarbonforunder$85pertonneonanall-in,levelizedbasisover12years,thentheprojectisfinanciallyfeasible.38SeveralothertaxcreditscouldsupportdeploymentofCCUS,includingthe45Vtaxcreditforcleanhydrogenproductionandthe40Band45Ztaxcreditsforsustainableaviationfuelsandlow-carbontransportationfuels.45Yand48Etaxcreditsareapplicableforelectricitygeneratingfacilitieswithlifecyclegreenhousegasemissionsratesofzeroorless.Projectscannot“stack”45Qwith45V,40B,45Z,45Y,or48Ecredits.TheIRAalsoprovides$5.8Btosupportadvancedindustrialdecarbonizationdeployment,whichcouldincludecarbonmanagementprojectsintheindustrialsector.36FullrangefromthePrincetonNetZeroAmericasreportis100-700MTPAby205037$85/tonforsequestrationsubjecttocertainlaborrequirements.IfCO2isutilized,thecreditis$60/ton.ForDACprojects,45Qvalueis$180/tonforsequestrationand$130/tonforutilization.38Someprojectsmaybeeligibleforotherincentivesorrevenuestreams,includingstate-levelincentivesliketheCaliforniaLCFSortheabilitytosellalow-carbonproductforapremium(e.g.,greensteel.)19PathwaystoCommercialLiftoff:CarbonManagementFigure11:Updates/enhancementstothe45QtaxcreditfromtheIRAprovidesanenhanced45QtaxcreditforcarboncaptureAmountoftaxcredit$/tonneCO2Annualcarboncapturethresholds,ThousandtonnesCO2peryearPaymentmethodandtransferabilityTaxcredittocaptureequipmentownerandtransferablealongthevaluechainifcontractualarrangementinplaceDirectpayforfirst5yearsafterfacilityplacedinserviceandtransferabletounaffiliatedthirdpartiesthroughacashsale2100500DACIndustrialElectricgeneration100Electricgeneration1.00IndustrialDAC18.7512.50505050353535ElectricgenerationIndustrialDAC85851806060130Electricgeneration1Industrial1DAC1SequestrationEORorutilizationPrevious45Q(pre-InflationReductionAct)Updated45Q(post-InflationReductionAct)1Ifprevailingwageandapprenticeshiprequirementsaremet2Fortaxableentities;Tax-exemptentitiesareeligibletoreceivedirectpayforthefull12yearsofthe45QcreditSource:InflationReductionAct2022LowCarbonFuelStandard(LCFS)LowCarbonFuelStandardprogramsarecompliancemarketsthatrequireareductioninthecarbonintensityoftransportationfuelsthataresoldorsuppliedwithinacertaingeography.Stateregulatoryentitiesestablishdecliningyearlyfuelcarbonintensity(CI)requirements.FuelsthatexceedthismandatedCIgenerateacreditdeficit,whilethosebelowthemandatedCIgenerateacreditsurplus.Asaresult,low-carbonfuels(e.g.,ethanolproducedwithCCUS)canreceiverevenueforcredits.Additionally,intheCaliforniaLCFSmarket,DACcangenerateproject-basedcreditsfortonnescapturedandstored—evenifthecaptureoccursoutsideoftheLCFSgeography.CurrentlyLCFSmarketsoperateinCalifornia,Oregon,andWashington;additionalstatesareconsideringLCFSmarketadoption.ThevalueforcreditsinCalifornia’sLCFSmarkethasbeenvolatileinrecentyears,rangingfrom~$60to$200pertonneofCO2.20PathwaystoCommercialLiftoff:CarbonManagementBipartisanInfrastructureLaw(BIL)TheBILprovides~$12billioninfundingforhigh-potentialprojectsacrossthecarbonmanagementvaluechain,includingfundingfordemonstrationandpilotprojects.lxxTheBILalsoincludes$8BforRegionalCleanHydrogenHubs,atleastoneofwhichmustprioritizeprojectsthatuseCCUStogeneratecleanhydrogenand$500MforIndustrialEmissionsDemonstrationProjectsthatcouldincludecarbonmanagementtechnologies.•CarbonCaptureDemonstrationProjectsProgram($2.5B)•CarbonCaptureLarge-scalePilotProjects($937M)•CarbonCaptureTechnologyProgram,Front-EndEngineeringandDesign($100M)•CarbonDioxideTransportationInfrastructureFinanceandInnovation($2.1B)40•CarbonStorageValidationandTesting($2.5B)•CarbonUtilizationProgram($310M)•CommercialDirectAirCaptureTechnologiesPrizeCompetitions($100M)•PrecommercialDirectAirCaptureTechnologiesPrizeCompetitions($15M)•RegionalDirectAirCaptureHubs($3.5B)CarbonNegativeShotTheCarbonNegativeShotestablishesanobjectivetoadvanceCDRpathwaysthatwillcaptureandstoreCO2atgigatonnescaleforlessthan$100pernettonneofCO2-equivalentwithinthedecade.ThiseffortispartofDOE’sEnergyEarthshotsInitiative,whichaimstoacceleratebreakthroughsofabundant,affordableandreliableclean-energysolutions.ProcurementofLow-CarbonProductsorCarbonUtilizationProductsSeveralstateandlocalgovernmentshavepassedlawsthatmandatetheconsiderationoftheembodiedemissionsoftheproductstheypurchase,includingCalifornia,NewYork,andColorado.lxxiiCurrently,thesepoliciesfocusmostlyonbuildingmaterials(particularlyconcrete),andcanenablethetechnologicalmaturationofCO2utilizationinconcreteandaggregatesbydecreasingtheeconomicchallengestotheuseoftheseproducts.Recently,theDepartmentofEnergyreleasedaNoticeofIntenttoprovidegrantstostateandlocalgovernmentsthatwillhelppaytheaddedcostofprocuringcarbonutilizationproducts.40Fundingcovers“creditsubsidy”associatedwithaloan,meaning$2.1Binappropriationscouldtranslateto$10B+inloanauthority21PathwaystoCommercialLiftoff:CarbonManagementChapter3:PathwaystoWidespreadDeploymentKeytakeaways•ManycarbonmanagementtechnologiesarematureandoperatingatcommercialscaleintheU.S.today.•Thecarbonmanagementecosystemwillscalebetweennear-termandlonger-termopportunities.–Initially,alow-costtransportandstoragebackbonecandevelopbyconnectinghigh-purityCO2streams(e.g.,ethanol,hydrogenSMR,andnaturalgasprocessing).Investorsandprojectdevelopersareworkingonmorethan$10Binprojectsinthisspaceacrossthecarbonmanagementvaluechain.–Inparallel,pilotsandcommercialdemonstrationprojectscanhelpreducethecostofhigher-costpoint-sourceandCDRtechnologies•Sixmaindynamicsdefinethepotentialbuild-outofcarbonmanagementtechnologies:–Developmentoflowcost-of-capturesectorsthatareprofitabletodaywillaidinitialtransportandstoragebuild-out–Pilotandcommercialdemonstrationprojectsinlower-purityCCUSapplicationsandCDRwillhelptodecreasecostsandestablishrepeatablecommercialarrangements–Additionalcommercialrevenuestreams,policyincentives,orregulationsmaybeneededtoreachthescaleofcarboncapturerequiredfornet-zeroby2050–Significantscale-upofcarbon-freeenergyandtransmissioncapacityisneededforDACandcarbonutilizationdeploymentthatachievesGHGreductionsonalifecyclebasis–Build-outoftransportandstorageforCCUSandCDRinfrastructuremustbeswift–Financingcarbonmanagementprojectswilldependonarobusttaxequitymarketandimplementationof45Qtaxcredit“transferability”Section3.a:ThepathwaytowidespreaddeploymentCarbonmanagementisamaturetechnologywithover20MTPAincapturecapacityalreadydeployedandoperatingintheU.S.andseveralprojectsinadvancedstagesofdevelopment.Thissectionoutlinesthepathtowidespreadcommercialdeploymentatscale.Thecarbonmanagementecosystemisscalingthroughtwooverlappingtracks(Figure12):•Inthenear-term,industrieswithhigh-purityCO2streams(e.g.,ethanol,hydrogenfromsteammethanereforming(SMR),andnaturalgasprocessing)andotherlarge,integratedprojectswillleadthewaythrough2030.Theseearlyprojectshavemorefavorableeconomicsandcananchorthebuildoutoflarge-scaletransportandstorageinfrastructure—layingthefoundationforcarbonmanagementapplicationsinotherindustries(e.g.,steel,cement).•Longer-term,industrieswithlower-purityCO2streamswillseecostdeclinessupportedbypilotandcommercialdemonstrationprojectsnowthroughthemid-2030s.Demonstrationfundingandproject-specificfactors(e.g.,proximitytostorage,end-customerswillingnesstopay)willunlockFOAKdeploymentsinmanyofthesesectorspriorto2030.22PathwaystoCommercialLiftoff:CarbonManagement41Net-zerodecarbonizationscenariosforecastofwhatitwouldtaketoreachnet-zeroby2050underunconstrainedrenewableandtransmissioncapacity(onthelowend)andatechnology‘spike’caseonthehighendwherethedevelopmentofothertechnologiescontinuesatcurrentmomentumandcarbonmanagementplaysalargerroleindecarbonization.ModelingcompletedforthisPathwayseffort.Figure12:Near-termopportunitiesfocusonhigh-puritystreams;longer-termopportunitiesinlowerpuritystreamsrequiredemonstrationprojects41,lxxii1Ethanol,naturalgasprocessing,andhydrogenSMR2Abatedemissionsarebasedonthemodelingwiththerangescorrespondingtonetzeroandhightechnologycasescenarios.Fullrangeofemissionsabatedgivenotherreportsrangefrom400-1800MTPASource:DeploymentandinvestmentfiguresinthissectionarebasedonmodelingconductedforthisreportbyMcKinsey&CompanyinaccordancewithGovernmentContractNo.DE-AC02-06CH11357andsubcontract2J-60009.Deploymentnumbersfallwithinthegeneralrangesexpectedfromseveralgovernmentandotherresearchreports,including:Princeton’sNetZeroAmericareport(2021,theWhiteHousePathwaystoNet-ZeroGHGEmissionsby2050(2021),TheIPCC(2021,IRENA(2021),IEA(2021);)205020302040$50-80B$130-200B$300-600BInvestmentrequired,$B280-420570-1,2202Emissionsabated,MTPA70-110DescriptionNear-termhorizonLonger-termhorizonDemonstrationprojectsinlowerpurityCO2streamstoachievecostdeclinesinhighcapturecostindustries,enablingbreakevenandeventualprofitabilityLonger-termopportunities-acceleratedbuild-outinlowerpuritystreamsasadditionalprojectsbecomeeconomicalFormalizationofcarbonmarketsenablerevenuestreamsormarketsignalsbeyond45QScaleddeploymenttoreachnetzero–scaleofCCUSandCDRtoachievenetzerotargetsNear-termopportunities-developmentinindustrieswithhigh-purityCO2streams1andotherlarge,integratedprojectsBuildoutlarge-scaletransportandstorageinfrastructure23PathwaystoCommercialLiftoff:CarbonManagementCarboncapturecosts1excludingstorageandtransportcosts,$/tonneCO2Figure13:CarboncapturecostisafunctionofCO2concentrationandotherfacility-specificfactorsAcrossbothopportunities,70–110MTPAofcarbon-managementcapacityisexpectedby2030,primarilyfromthecaptureofhigh-purityCO2streamsanddemonstrationprojectsinlower-purityanddiffusesteams.42High-purityCCUSalreadyhasmomentum,withdevelopersworkingonlarge-scalepipelinestoconnectethanol,ammonia,gasprocessing,andsomehydrogenprojectsthataddressrelativelylowcost-of-capturestreams.However,someotherprojecttypesbecomeeconomiconlywithadditionalgovernmentsupportorpolicy,alternativecarbonmarketsorrevenuestreams,orcostreductionfromdemonstrationprojects(Figure14.).Someparticularlyattractiveprojectsinthelower-purityindustries(e.g.,verylargeemissionssourcesclosetotransportand/orstorage)arebeingdeveloped,butbroaderlift-offcouldrequireadditionalfinancialorregulatoryincentives—andregulatorydevelopmentsinparticularcouldplayadramaticroleinacceleratingthepathwaysdescribedhere.1DisplayedcostestimatesbasedonEFIFoundationcapturecostswithtransport(GCCSI,2019)andstorage(BNEF,2022)costsof~$10-40/tonne,exceptwherenoted.Allin2022dollars.AllCCUSfiguresrepresentretrofits,notnew-buildfacilities.ThelowerboundcostsrepresentsaNOAKplantinalowcostretrofitscenariowithlowinflation.ThehigherboundcostsrepresentsaFOAKplantinahighcostretrofitscenariowithhighinflation.Theinflationvarianceoneachcostestimaterepresentstherangeofcostincreasesonagenericchemicalprocessingfacilityduetoinflationfrom2018usingtheChemicalEngineeringPlantCostIndex(CEPCI).2Basedonliquidsolventrangeof$225-355/tonneandsolidsorbentrangeof$330-600/tonnefromNETL:DirectaircapturesolventandsorbentstudiesandClimeworks(forsolidsorbent)3CO2concentrationisnottheonlydriverofcostindifficulttoabatesectors.Multipleunits/emissionsstreams,impurities,andotherfactorscancontribute.4IncludesBECCStopower,biochar,andbio-oilSource:EFIFoundation,“TurningCCSProjectsinHeavyIndustry&PowerintoBlueChipFinancialInvestments”.HydrogenSMR-onlycapturecostsfromIEA2019.;CoalandCCGTpowerplantretrofitcostofcapturefiguresderivedfromNETLRevision4aFossilBaselinestudyretrofitcasesadjustedto2022dollarsandwith12-yearamortization—rangerepresentsFOAKwithhighretrofitfactor(highfigure)toNOAKwithlowretrofitfactor(lowfigure).DACcostsfromNETL:Directaircapturesolventandsorbentstudies;UpperboundofsolidsorbentfromClimeworks2018,alsocitedin“Areviewofdirectaircapture(DAC):scalingupcommercialtechnologiesandinnovatingforthefuture"(McQueen2021);BiCRScostestimatesfromCoalitionforNegativeEmissionsforfirst-of-a-kindBECCSforpowerwithmodifiedfinancingcostssameasabove.LowrangesofpurchaseofbiomassprocessedfeedstockandbiomasstransporttakenfromFAOU.S.biomasscostestimatesratherthanCoalitionforNegativeEmissions,whichhashigherestimatesapplicabletoaUK-basedplant(“EconomicanalysisofwoodybiomasssupplychaininMaine(Whalley2017))andICEF“BiomassCarbonRemovalandStorage(BiCRS)Roadmap”(2021),CharmIndustrial“CarbonRemoval:PuttingOilBackUnderground”(2021);MineralizationcostsfromauthorbenchmarkcostusedinIPCC.Costsforexsitumineralizationwithwollastonite,olivine-rich,andserpentine-richtailingsusingheatandconcentratedCO2fromKelemenP,BensonSM,PilorgéH,PsarrasPandWilcoxJ(2019)AnOverviewoftheStatusandChallengesofCO2StorageinMineralsandGeologicalFormations.Front.Clim.1:9.doi:10.3389/fclim.2019.00009;CurrentemissionsfromEPAGHGRPFLIGHTdatabase2019andincludesbiogenicCO2emissionsforpulpandpaper(~110MTPA)Note:Applicationsarearrangedleft-to-rightbyindustry,power,andCDRreflectingtheroughCO2concentrationoftheCO2sourcesassociatedwiththeseapplicationsExtremelylowpurityCO2streams123High-purityCO2streamsMediumtolowpurityCO2streams1752200200150050600100Steel(BlastFurnace–BOF)Hydrogen(SMRonly)18-26Directaircapture2Refineries(FluidizedCatalyticCracker)Hydrogen(SMRandstreamproduction,90%capture)Pulp&paper(Blackliquorboiler)CementproductionAmmonia(fluegas)Powerplants-CoalPowerplants-CCGTBiCRS4Mineralization(ex-situ)14-2082-1365076-12168-11475-11953-8690-600225-60061-9476-12386-116NaturalgasprocessingEthanol80-600HighpuritysourceCurrentemissions,MTPAMedtolowpuritysourceExtremelylowpuritysourcex42Lowcaseprojecting40-50%ofallethanol,ammonia,andnaturalgasprocessingandaccessibleH2installcapture,aswellasonedemonstrationprojectataverageplantsizeinpower,refining,cement,steel,DAC,andotherCDR.CurrentemissionsfromEPAGHGRPFLIGHTdatabase.Highcaserepresents70-80%ofethanol,ammoniaandH2,50%ofnaturalgasprocessing,~2demonstrationprojectsataverageplantsizeinpower,refining,cementandsteel,andannouncedcapacityofleadingDACplayer.24PathwaystoCommercialLiftoff:CarbonManagementCostsandpotentialrevenuesforCCUSpointsourceretrofitsinhighercost-of-captureapplicationsFigure14:Lowerpuritypointsourcesrequirefurthercostreductionsoradditionalrevenuestreams1Revenueincludes45Qforallindustries,withavalueof$60-85/tonne.PulpandpaperincludespotentialVCMrevenue.HydrogenrevenueincludesPTC,estimatedtobe~$100/tonne.2.IndustrialapplicationsfromEFIFoundation,“TurningCCSProjectsinHeavyIndustry&PowerintoBlueChipFinancialInvestments”CoalandCCGTpowerplantretrofitcostofcapturefiguresderivedfromNETLRevision4aFossilBaselinestudyretrofitcasesadjustedto2022dollarsandwith12-yearamortization—rangerepresentsFOAKwithhighretrofitfactor(highfigure)toNOAKwithlowretrofitfactor(lowfigure).Transport(GCCSI,2019)andstorage(BNEF,2022)rangefrom$10-40/tonnePowerplants-coalCementproductionSteel(Blastfurnace–BOF)PulpandPaper(Blackliquorboiler)Powerplants-CCGTRefineries(Fluidizedcatalyticcracker)Hydrogen(SMRandsteamproduction,90%capture)Ammonia(fluegas)85-28585-15963-12686-1618571-1348596-1568586-163858578-15485-10092-17685-100DynamicsimpactingpathwaystocommercializationscaleSixdynamicsimpactthecommercializationpathwayforcarbonmanagement.Developmentoflow-cost-of-capturesectorsthataresolidlyinvestabletodaywillaidearlyinfrastructurebuild-out,butisnotsufficienttoreachnet-zerogoalsToday,build-outofCCUSisprimarilyinindustrieswithalowcostofcapturingCO2,typicallyenabledbyhigh-purityCO2streams(e.g.,ethanol,natural-gasprocessing,hydrogenfromSMR).BusinesscasemodelingsuggeststhatethanolCCUSprojectscouldseeunleveredinternalratesofreturn(IRRs)of10–15%ormorewiththeenhanced45QtaxcreditfromtheIRA.Projectdevelopmentintheselowcost-of-captureapplicationsisongoingandaccelerating.Althoughtheseprojectsconstituteafractionofoverallcarbonmanagementpotential,theycanjumpstartthebuild-outofsharedtransportandstorageinfrastructure.Highercost-of-captureCCUSandCDRmaynotdeployabsentadditionaldrivers,suchasregulationsCurrentaveragecostsareestimatedtobeclosetoorabovethe$85pertonneCO245Qcreditinhigher-costapplications(e.g.,cement,ironandsteel,powerincludingBECCS),andsustainedinflationcouldincreasecostsfurthergiventhattheIRAsuspendsinflationadjustmentfor45Quntilafter2025.LimitedrevenuesourcesforcapturedCO2beyondthe12-year45Qtaxcreditwindowresultsincarbonmanagementprojectsthatareeconomicallychallengedtoday(Figure14.)Individualprojectdynamics(e.g.,closeproximitytostorage)arecritical,andprojectswillbesensitivetoanycostoverruns.Regulationsconstrainingemissionsfromanyoftherelevantsectorscouldshiftcommercializationsignificantly.ForDAC,thenewIRA45Qtaxcreditof$180pertonneisstillinsufficientwithoutfurthercostdeclinesorstrongmarketsforcarbonremovalcredits.45Qutilization45QstorageProjectedrevenue(low)1,$/tonneTotalcost(low)2,$/tonneTotalcost(high)2,$/tonneProjectedrevenue(high)1,$/tonne25PathwaystoCommercialLiftoff:CarbonManagementDemonstrationandinitialcommercialprojectsarecriticaltoachievingcostdeclinesthrough“learning-by-doing”.RetrofittingCCUSinsomecontextscanrequiresomefacility-specificdesignsthatmaynotbeperfectlytransferrabletootherfacilities.Nevertheless,creationofstandard(e.g.,startingpoint)designs,increasedmodularization,anddisseminationofoperationallearningswillenablecostreductionsovertime.Researchersanddevelopersexpectcostdeclineswithdeployment,thoughthepersistentenergyrequirementsformanycarbonmanagementtechnologiesmeanthatthedrasticcostdeclinesobservedinno-fueltechnologieslikewindandsolarareunlikely.ResearchershavemodeledpotentialCapExlearningratesforDACof10-20%(thatis,a10-20%declineinCapExcostsforeverycumulativedoublingofcapacity.)Developershavesetaggressivecostreductiontargets.Start-upshaveannouncedpathwaystoachieve$30-50/tonnecostofcaptureforindustrialsources(from$60-120/tonnetoday)andDACdevelopersCarbonEngineeringandClimeworksclaimapathwayto~$100/tonnewithintenyears.lxxiii,lxxiv,lxxvCostdeclinesinCO2transportandstorageareachievablethroughbuildingsharedregionalpipelineandstoragenetworksbutgiventheirrelativelysmallshareoftotalcostsforhighercost-of-captureapplicationsthesereductionsalonemaynotmakeretrofitprojectsprofitableintheabsenceofotherdrivers.Additionalrevenuestreamsorregulationmayberequiredtoreachthescaleofcarboncaptureneededfornet-zeroby2050.Ifcostdeclinesdonotbringlevelizedcostsofcarbonmanagementbelowexpectedrevenues,additionalrevenuesourcesorregulationwillbeneededforcarbonmanagementtoreachascaleofdeploymentcommensuratewithitsemissionsreductionpotential.Inmanycases,FOAKdeploymentsfinancedbyBILandIRAwillestablishbaselinecostsandsubsequentfacilitieswillrealizecostreductionsasaresultofprojectdevelopment,technology,permitting,andcommunityengagementlearnings,aswellaseconomiesofscaleandenablinginfrastructure.While45QconstitutestheprimaryincentiveforcarbonmanagementintheUStodayandisscheduledtosunsetfornewprojectsbeginningconstructionafter2032,industryplayersacrossCCUSandCDRexpectregulationsandprivatesectoractiontocontinueincentivizingordrivinggrowthofcarbonmanagementinthefuture.Mechanismscouldincludeextensionof45Q,regulationssuchasemissionsstandards,capandtradeprogramsorcarbontaxes,orsupportforotherrevenuestreams(e.g.,voluntarycarbonmarkets,technologypremiums,premiumPPAsandrevenuesfromotherproducts.).Build-outofDACandCO2utilizationcouldbelimitedifcleanenergybuild-outisconstrained.Today’sDACtechnologiesrequiresignificantenergyandheattooperate;currenttechnologyrequires~6–8GJpertonneCO2captured.lxxviWithcurrentconfigurations,thermalenergyaccountsfor~80%oftotalenergyneedsforsorbent-basedDAC.lxxviiAchievingnet-negativeemissions,therefore,willrequiresignificantcleanpowerandthermalenergyforDACtechnologies.CleanenergyisalsoneededforutilizationpathwaysinwhichCO2andCOareconvertedtoothermolecules(e.g.,synfuels,plastics).lxxviiiUpto9,300TWhperyearofadditionalzero-carbonelectricitycapacitycouldbeneededtoachievenet-zeroaviationgloballyby2050.lxxixThislevelofgenerationrepresentsmorethandoublethetotalannualelectricityconsumptionintheU.S.Build-outoftransportandstorageinfrastructureforcarbonmanagementmustbeswift.Thebuild-outofCO2transportandstorageinfrastructureiscritical.Currently,theU.S.has~5,000milesofoperationalCO2pipelines,largelydevelopedforenhancedoilrecovery(EOR).Significantnewtransportinfrastructurethatcanenablegeologicsalineaquiferstoragewillbecrucialasthecarbonmanagementecosystemdevelops.SeveralstudieshaveattemptedtooptimizetherequiredpipelinesbasedonvaryingestimatesofCO2thatwillneedtobetransported.Regardlessofthescenario,studiessuggesttransportcapacitymustbescaledto30,000-96,000milesby2050(Figure15.).lxxxInadditiontoexpansioninpipelinecapacity,othermodesofCO2transportincludingbarge,ship,train,andtrucksarelikelytoserveanimportantroleinfacilitatingoffshorestorage,shorterroutes,andcollectionfrommultipleproximatefacilities.lxxxi26PathwaystoCommercialLiftoff:CarbonManagementFigure15:Differentpipelinenetworkconfigurationshavebeenproposedbyvariousstudies,with30,000to96,000milesofpipelineexpectedtoberequiredby2050ThescaleofCCUSdeploymentwillalsorequiresignificantstoragecapacitytobedeveloped.Thetimelinetopermitanddevelopstoragecapacitymustbeacceleratedtomeettheamountofstorageneededtosupport70–110MTPAby2030.Morethan50MTPAofClassVIapplicationsarecurrentlyawaitingorunderreview.lxxxiiStateClassVIprimacyandEPAachievingitsgoalof2-yearprocessingtimelinescanalleviatethispotentialbottleneck.Projectfinancewilldependonarobusttaxequitymarketandimplementationof45Q“transferability”Likeothercleanenergytechnologies,carbonmanagementprojectsmustusethefuturedeliveryoffederaltaxcreditstofinancelargeupfrontconstructioncosts.Incarbonmanagement’scase,thesearethe45QtaxcreditsprojectsreceivefromtheIRSforeachtonneofcapturedcarbonemissionstheysuccessfullystoreorutilize.While45Qprojectsdevelopedbyfor-profitentitiescanreceivedirectpaymentofthefacevalueofthecreditforthefirstfiveyearsofprojectoperations,mostprojects’creditsinyears6-12mustbeuseddirectlybytheprojectsponsor,monetizedviaataxequityinvestor,orsoldtoanotherentitywithataxliabilityunderthenew“transferability”provisionsintheIRA.43Carbonmanagementprojectshavesubstantialoperationalcostsand,absentotherdrivers,projectsmaynotbeabletoprofitablycontinueoperationofcaptureequipmentoncetheystopreceiving45Qcreditsafter12yearsofoperations.44Asaresult,projectfinanceinvestorsincarbonmanagementprojectsgenerallymustplantohittheirreturnthresholdswithin12years.Carbonmanagementprojectscouldpursuefinancingthroughtaxequityorthroughtraditionalprojectfinance.Bothapproachesfaceuncertaintiesthatcouldcomplicateprojectdevelopment.Source:NETLReviewofCO2PipelinesintheUnitedStates,Princetonnet-zeroAmericas,GreatPlainsInstituteCurrentstate(~4,500miles)CasePipelinescenarioGreatPlainsInstitute(~30,000miles)NetZeroAmericas(~70,000miles)DOEstresscasefromNetZeroAmerica(~96,000miles)CasePipelinescenario43Not-for-profitentitieslikeruralelectriccooperativescanreceivedirectpaymentforall12yearsofthecredit.44Manyinvestorsexpectfurtherpolicysupportorregulationtocomeintoplayas45Qfacilitiesstartreachingtheendofthis12-yearperiod,butthissupportisnotcertain.27PathwaystoCommercialLiftoff:CarbonManagementTaxequityistheprimarywaycleanenergydevelopers,especiallyinwindandsolar,havemonetizedtheirtaxcreditsiftheydonothaveasufficienttaxliabilityoftheirown.Taxequityallowsentitieswithalargetaxbilltoputupupfrontcapitalintheprojectinexchangefortherighttothetaxcreditsgenerated.Thesetaxequityinvestorscanthenusethesetaxcreditstolowertheirtaxliability.Taxequityrequirescomplexprojectstructuringanddevelopersgenerallycedeaportionofthefacevalueofthecredittotheirtaxequitypartner.Challengesforcarbonmanagementprojectsusingtaxequityinclude:•Thesizeofthetaxequitymarketisconstrained:Historically,onlylargefinancialinstitutionshavehadthepersistenttaxbillandstructuredfinancewherewithalthatmaketaxequityanattractiveproposition.Thetotalmarketfortaxequityis~$20billion/yearandtwobanks–JPMorganandBankofAmerica–accountfor~50%oftaxequityvolumes.lxxxiiiFuturegrowthofthetaxequitymarketmaybeconstrained.Thelargenumberoftaxequity-eligibleprojectsseekingtopartnerwitharelativelysmallnumberoftaxequityinvestorshasledtoprojectsconsistentlyacceptingtaxequityinvestmentatasignificanteffectivediscounttofacevalue.•Carbonmanagementprojectswillcompetewithothercleanenergyprojectsfortaxequityinvestors’interest:Historically,taxequityinvestorshavefocusedalmostexclusivelyonwindandsolarprojects.Windandsolararewell-understoodassetclasseswithreliabletaxequitystructuresthattaxequityinvestorsarecomfortablewith.Theexpansionof45Q,theextensionofrenewableenergycredits,andthecreationoflargenewcreditslike45Vforhydrogenproductioncouldcreatehundredsofbillionsofdollarsinprojectsseekingtaxequitycomparedtoataxequitymarketof~$20billion/year.Traditionalprojectfinance,inwhichprojectsreceivedebtagainstexpectedfuturecashflows,maybecomeamoreviableoptionforcarbonmanagementprojectswiththepassageoftheIRA.Tax-exemptentitiescanreceivedirectpaymentsfor45Qtaxcredits,simplifyingprojectfinanceforthesedevelopersdramatically.Fornon-tax-exemptdevelopers,directpaymentisavailableforthefirstfiveyearsoftheproject.Afteryearfive,theIRAallowsfor-profitentitiestotransfertaxcreditstotaxpayersuninvolvedinaproject.Projectscansellthosecreditsdirectlytoentitieswithataxbilltheyaretryingtominimize.Thesecarbonmanagementprojectsmayseekaloanfromcommercialbanksunderwrittenbytheexpectedrevenuesfromtransferringcreditsinyears6-12ofprojectoperations.Thescaleoftraditionalprojectfinanceforcarbonmanagementprojectswilldependontheextenttowhichthefollowingchallengesrelatedtothetransferof45Qtaxcreditscanbeovercome:•Unfamiliarbuyers:Thenoveltyoftaxcredittransferabilitymeansthatpotentialbuyerswillbeunfamiliarwiththemarket.ItwilltaketimeforCFOsofcorporationswithtaxliabilities,forexample,tolearnabouttransferabilityandgetcomfortableenteringapurchaseagreementfortaxcredits.Potentialbuyerswilllikelybecomemorefamiliarwiththetransferabilitymarketovertime.•Uncertainvalueoftransferablecredits:Projectswillhavetoselltheirtaxcreditsatsomediscounttotheirfacevalue(e.g.,90centsonthedollar)toattractbuyers,butitisdifficulttodeterminewhatthisdiscountwillbeinyears6-12ofacarbonmanagementproject.Corporationsareoneofthemostlikelybuyersoftransferabletaxcredits,buteachindividualcorporation’staxbilldifferssignificantlyfromyeartoyeardependingonprofitabilityandotherfactors.Thiscouldmakeitdifficultforprojectstosecurepurchasersfortheircreditsinadvance,whichcanmakeitchallengingtoreceiveupfrontfinancingbasedontheseexpectedrevenues.Carbonmanagementdeveloperswithalargetaxliabilityoftheirown(e.g.,somelargeoilandgascompanies)mayfacelesscomplexityinfinancingtheirprojectsiftheyexpecttobeabletousetheirtaxcreditsdirectly.Butevenlargecompaniescanlackaconsistentenoughannualtaxliabilitytobeabletorelyondirectuseoftaxcreditsaprojectwillgenerateforthe7yearsremainingafterthe5yearsofdirectpayfor45Qexpires.Projectdeploymentsoverthenextfewyears,aswellasfurtherdetailsonhowthetransferabilitymechanismwilloperate,maysurfacesolutionstosomeofthesefinancingchallenges.28PathwaystoCommercialLiftoff:CarbonManagementSection3.bImpliedcapitalformationKeytakeaways•Thefirstgenerationofcarbonmanagementprojectsreliedongovernmentfundingandcorporateinvestmentfromlargeindustryplayers;thelevelofriskassociatedwiththeseprojectswasincompatiblewithsignificantdebt/equityfinancingfromprivateequity,institutionalinvestors,orbanks•Morerecentcarbonmanagementprojectshavebeguntoattractestablishedinfrastructureinvestors•Therequiredcapitalformationforcarbonmanagementdeploymentissignificantthrough2030($50–80Btotal)andmustaccelerateafterwards,from~$10Bperyearto$20–40Bperyeartoachievethelevelofdeploymentmodelingscenariossuggestmaybeneededtoreachnet-zero•ThiscapitalaccelerationrequiressignificantprogressthroughFOAKandNOAKineachtechnologyandbusinessmodeltomitigateexecutionriskandunlocklargerpoolsoflower-costcapitalForecastedinvestmentneeds45ScalingCCUSandCDRwillrequireinvestmentalongthefullvaluechain,includinginvestmentintechnology,captureprojects,transport,andstorage.Toreachnet-zeroby2050,$50–80Bofinvestmentwillbeneededby2030and$300–600Bofcumulativeinvestmentby2050.lxxxiv,45Hightechnologyadoptionby2030isforecastedinhigh-puritysources(e.g.,ethanol,hydrogenSMR,andgasprocessing)withmultiplelarge-scalecommercialprojectsinlower-purityindustriesandamongcertainCDRtechnologies.Thesenear-terminvestmentscouldspurfurtherinvestmentinthesector,withthehigherinvestmentlevelscorrespondingtoanet-zeroemissionsscenariowithahigh-technologyuptake.Approximately10%ofthisinvestmentneedisinthedevelopmentoftransportandstorageinfrastructure;theremaininginvestmentisrequiredforcapturefacilitybuild-out.lxxxvThislevelofinvestmentacrossthevaluechainrepresentsasignificantaccelerationrelativetothecurrenttrajectory(Figure16.).lxxxviFigure16:~$300-600Binvestmentwouldberequiredforanetzeroscenariowith~570-1,220MTPAofCCUSandCDR471ManyprojectshavenotannouncedinvestmentassociatedwiththeprojectSource:McKinseyPowerModel,GlobalEnergyPerspective2022,GHGFLIGHTDatabase2022,NPCreport,Projectannouncementsandpressreleases,CoalitionforNegativeEmissions;DACandBECCSweretheonlyCDRtechnologiesmodeledAnnouncedandestimatedrequiredCCUStotalCapexinvestment,$BAnnouncedandestimatedrequiredCCUStotalcapacity,MTPAAnnouncedandestimatedrequiredCDRtotalcapacity,MTPAAnnouncedandestimatedrequiredCDRtotalCapexinvestment,$BPlannedinvestmentsthrough20301Gapto2030~85-3102030Gapto20502050~100-350~10~5-30~15-40OperationalGapto20302030~300-900Gapto2050~250-8302050~30-50~20~50-70OperationalGapto20302030Gapto20502050~225-270~0~25-30~25-30~250-300HighestimateLowestimateHighestimateLowestimateHighestimateLowestimatePlannedinvestmentsthrough20301~30-40Gapto20302030Gapto20502050~5~35-45~165-205~200-250HighestimateLowestimate45DeploymentandinvestmentfiguresinthissectionarebasedonmodelingconductedforthisreportbyMcKinsey&CompanyinaccordancewithGovernmentContractNo.DE-AC02-06CH11357andsubcontract2J-60009.Deploymentnumbersfallwithinthegeneralrangesexpectedfromseveralgovernmentandotherresearchreports,including:Princeton’sNetZeroAmericareport(2021,theWhiteHousePathwaystoNet-ZeroGHGEmissionsby2050(2021),TheIPCC(2021,IRENA(2021),IEA(2021);)46Rangebasedonnet-zero2050–highREdecarbonizationscenarioandcarbonmanagementtechnologyspikescenario47Rangebasedonnet-zero2050–highREdecarbonizationscenarioandcarbonmanagementtechnologyspikescenario29PathwaystoCommercialLiftoff:CarbonManagementSourcesofcapitalCarbonmanagementinlowcost-of-captureapplicationsisincreasinglyattractinginterestfromestablishedinfrastructureinvestorsandcommercialbanks.Morethan$1billionhasbeenraisedtodeveloplarge-scaleCO2pipelinesandcaptureequipmentonethanolfacilitiesintheMidwestbyestablishedprivateequityandinfrastructureinvestors,includingBlackrock,TPG,andCPPIB.lxxxviiFirst-of-a-kindlarge-scaledirectaircaptureprojectsarealsoseeinginterest.ADACdeveloperraisedover$600millioninequityin2022andoneestablishedoilandgasplayerplanstoself-fundseveralDACprojectsfromequityorcorporate-backeddebt.lxxxviii,lxxxvix,48Theseprojectscouldunlocklower-costdebtfinancingiftheyaresufficientlyde-riskedduringdevelopment.However,industryparticipantshaveindicatedthatmostCCUSandCDRprojectsthatareeconomicallymarginalunderthecurrentpolicyenvironmentcouldrequiregovernmentfundingorstrategicbalance-sheetinvestmentfromlargeindustryplayers—orachangeinthepolicyenvironment.TheseprojectshavethusfarseenlesssuccessaccessingprojectequityfundingfromPEorinstitutionalinvestors,orprojectdebtfrombanks.Aspreviouslydiscussed,carbonmanagementprojectscouldrequireparticipationoftaxequityinvestorswhoconstitutearelativelysmallmarket(~$20B/year)inthecontextoftotaldeploymentneedsandhaveshownapreferenceformoreestablishedtechnologieslikewindandsolar.Scalingcarboncapturebeyond2030onapathtowardswhatisneededtoreach2050netzerogoalsrequiresinvestmentstobesufficientlyde-riskedtounlocklater-stage,lower-costcapital(e.g.,infrastructurefunds,institutionalfunds,andbanks).AsCCUSandcertainCDRtechnologiesmovefromFOAKtonth-of-a-kind(NOAK),developersandresearchersexpecttechnologyandexecutionriskstodecrease,andabroaderrangeofinvestorscanmoveintothisgrowingmarket.Section3.cBroaderimplicationsKeytakeaways•ThematerialsandhumanresourcesrequiredtobuildCCUSandCDRprojectsatthescalesanticipatedwillrequiremajorinvestmentsinsupplychainandworkforcedevelopment.Beyondclimatebenefits,widespreaddeploymentofCCUSandCDRcould:–Add~$600B–1,450Bingrossvalueaddedtotheeconomyby2050–Support~3millioncumulativedirectjob-yearsby2050—withmorethan70%payingabovethemediansalary.•Evaluatingtheappropriatenessofcarbonmanagementprojectswillrelyondeterminingwhethertheproject’sbenefitsalignwithregionalneeds(employmentopportunities,taxrevenues,communityneedsandbenefits,airpollutionreductions,etc.).RobustandmeaningfulengagementwithincommunitiesthatmayconsiderhostingCCUSorCDRprojectscanhelptobuildunderstandingandalignprojectdevelopmentwithcommunityprioritiesandneeds.Frequentandgenuineconsultationandengagementwithcommunitymembersandlocalorganizationsandstakeholderswillbeaprerequisiteforprojectsuccessbyhelpingtoensurethatprojectsgarnercommunitysupportbyaddressinglocalenvironmental,economic,andsocialconsiderationsandthenincorporatingsuchconsiderationsintoprojectdesign.48Forexample,OccidentalPetroleumhasannouncedthatitwillspendatleast$1billiononaDACfacilityforastart-upin202430PathwaystoCommercialLiftoff:CarbonManagementSection3.c.iSupplychainCommonpointsourceaminesarecommerciallyavailableandgenerallyhaverobustandresilientsupplychainsthatcouldenablerapidscaleup.SomeDACsystemsmayalsorelyonsimilaramine-basedtechnologiesandcouldbenefitfromexistingsupplychaininfrastructure.Becauseofthismaturity,aDOEreviewfoundthatthereislowsupplychainriskassociatedwiththemaininputsforscale-up.xcOthermorenascentcarboncaptureandCDRtechnologiesrequiredifferentsupplychains,butmosttechnologiesrelyoncommoninputsthatarealreadywidelyproducedbothintheU.S.andglobally.Certaincarbonmanagementprojectsmayfacefuelorfeedstockrisk,asinthecaseofBiCRSprojects,whichideallyrelyonsourcesofbiomassthatcanprovideGHGbenefitswhenused.WhiletheU.S.maybeabletoproduceupto1billiontonnesofbiomassby2050,otherpotentiallyhigher-valueapplications(e.g.,sustainableaviation,biochemicals)couldincreasefeedstockcostsforBiCRStechnologies.xciCoal-ornaturalgas-poweredplantsandcaptureunitsmayalsofacefuelriskinascenarioinwhichdecarbonizationmakesthesefuelsourceslessaccessible.~200k–300KDirectjob-years1by2030$~75–110BAddedtotheeconomyby2030~70kAverage2incomeofjob-yearscreatedTradejob-yearscreatedfromconstructionandoperationactivities40%Deployingcarbonmanagementtoachievenetzerogoalsdependsonaskilledandtrainedworkforceandcanhavesignificantsocioeconomicimpacts.WidespreaddeploymentofCCUSandCDRhasthepotentialtoaddvaluetogrossdomesticproduct(GDP),supportdomesticindustries,generatejobsduringtheconstructionandoperationofplants,andprovideeconomicandenvironmentalbenefitstoaffectedcommunities.491Ajob-yearisoneyearofworkforoneperson;anewconstructionjobthatlastsfiveyearsisfivejob-years.2.WeightedaverageSource:McKinseyintegratedmodelingbasedoninputsfromMcKinseyPowerModel,GlobalEnergyPerspective2022,GHGFlightDatabase2022,VividEconomicsI3MEconomicModelandothersourcesFigure17:Projectedsocioeconomicimpactsfromcarbonmanagementbuild-outReachingnet-zeroby2050couldrequire~$300-600billionincumulativecapitalinvestmentincarbonmanagement.Thisinvestmentcouldadd~$500B–1,000Bingrossvalue(GVA)totheeconomyandrequiremorethan3millioncumulativedirectjob-yearsbetween2020–2050(Figure18.).50High-payingjobsthatofferstronglaborprotectionsandtraining/placementopportunitiessuchasregisteredapprenticeshipsandpathwaysforlong-termcareergrowthcanstrengthentheeconomywhilesupportingtheenergytransition.The“PathwaystoCommercialLiftoff:OverviewofSocietalConsiderationsandImpacts”providesanin-depthdiscussionofthesignificanceofthesequalityjobscharacteristicsandhowtheycanbeachieved.Themajorityofdirectjobs(~90%)areexpectedtobeintheconstructionoffacilities,whichtendtobeproject-based.xcii,51Theremaining~10%ofjobsareexpectedtobetiedtoongoingfacilityoperationsandmaintenance.Intermsofvaluechain,capturecoulddrive90%ofthejobs.Jobscreatedtendtobeskilledandpayaboveprevailinglocalmedianwages.52Tradesandengineersaccountforroughly40%and15%ofdirectjobcreation,respectively.5349Directemploymentbenefitsestimatethenumberofjobssupportedbycapitalexpenditure.Indirectjobsarejobssupportedbytheshareofcapitalexpendituredirectedtospendingongoodsandservicesinthewiderdomesticsupplychain.50Grossvalueadded(GVA)canbedefinedasthemeasureofthevalueofgoodsandservicesproducedinanarea,industryorsectorofaneconomy.ItiscomparabletoGDPbutdoesnotincludetaxesorsubsidies.ModelingbasedoninputsfromMcKinseyPowerModel,GlobalEnergyPerspective2022,GHGFLIGHTDatabase2022,VividEconomicsI3MEconomicModelandothersources.TheanalysiswasperformedusingtheI3MEconomicModelusinginput-outputtablesdevelopedbyIMPLAN.Theanalysisassumesa10%shareofdomesticmanufacturingincapitalexpendituresandanassumptionthatannualoperationalexpendituresamountto4.81%oftotalcapitalexpenditureacrossalltechnologiesandsectors51Becausetherearelikelytobemoreconstructionjobsthanmanufacturingequipmentjobs,employmentduringtheconstructionphasewouldbeskewedtojobsthatmovefromprojecttoproject.52Theactualjobsassociatedwithcapitalinvestmentincarbonmanagementinanygivenyearwilldependonthepaceofprojectdevelopment.Thisnumberrepresentsanaverageinasingleyear;Ajob-yearisdefinedasonejobforoneyear.53Welders,electricians,metalworkers,fabricators,installation,maintenance,andrepairtechniciansandotherconstructionandmanufacturingtradesworkers.31PathwaystoCommercialLiftoff:CarbonManagementTotaldirectlaborpooltoachieve~0.5to1.2GTPAofcaptureby2050Constructionphase,kcumulativejob-years1Operationalphase,krecurringjobs1LowrangepresentsestimatebreakdownsfromtheCarbonCaptureNetZeroScenario.HighrangepresentsfiguresfromtheCarbonManagementtechnologyspikescenarioCaptureTransportStorage2020~2,40030402050<1~270~750HighcaseLowcase~1402020~10030402050~50202030402050<1~30~80~270202030400.52050<1~2~62020304020500~11~1~4202030402050~60<1~5~20Figure18.MostjobgenerationoriginatesfromconstructionofCCUSandCDRfacilitiesCreatingjobsdoesnotalwaystranslatetofillingjobs.Theskilledtradesandprofessionalrolesrequiredforscale-upcomprise<5%ofthecurrentworkforceinthosefields.Evenso,staffingtheserolescouldbechallengingasotherdecarbonizationtechnologiescomeonlineatthesametime.Thischallengecouldbeparticularlyacuteintheskilledtrades(e.g.,electrical,plumbing,andmechanicaltrades).Carbonmanagementeffortsshouldbepursuedincollaborationwithlaborandmanagementgroupsintheconstruction,oil,andgasindustries.Manyoftheskillsneededtobuildandoperatecarbonmanagementplantsaresimilartothoseusedbyworkersinexistingindustries,andthisexperiencecanbeleveragedtoeffectivelytransitiontheseworkersintonewjobs.Section3.c.iiEnergyandenvironmentaljusticeCarbonmanagementcompaniesandinvestorsplayacriticalroleindeterminingwhetherprojectssupportajustandequitablecleanenergytransitionorcontributetoexistinginjustices.xciiiThe“PathwaystoCommercialLiftoff:OverviewofSocietalConsiderationsandImpacts”coverskeyenergyandenvironmentaljustice(EEJ)considerations,recommendsspecificactions,andprovidesonlineresources,whilethesectionbelowcoversEEJconsiderationsandimpactsspecifictocarbonmanagement.Theenergyandenvironmentaljusticeimpactsofcarbonmanagementprojects,aswithanyproject,dependonwhatthebenefitsandharmsare,whoexperiencesthem,andhowtheimpactsalleviateorcompoundexistingburdens.Aswithotherenergytechnologies,thewaycarbonmanagementisdeployedcancombatorexacerbateexistinginequalities,especiallyifprojectsaresitedinornearexistingoil,gas,andchemicalfacilities,whicharedisproportionatelysitedincommunitiesofcolorandlow-incomecommunitiesthatareoverburdenedbyexistinginfrastructureandunderservedbygovernmentprograms.xciv,xcv,xcvi,xcvii,xcviii32Source:McKinseyPowerModel,GlobalEnergyPerspective2022,GHGFLIGHTDatabase2022,NPCreport,VividEconomicsI3MEconomicModelPathwaystoCommercialLiftoff:CarbonManagementEnsuringcarbonmanagementprojectssupportenergyandenvironmentaljusticeiscriticalasamoralimperative—andbecauseprojectsuccessdependsonit.xcixCarbonmanagementprojectshavealreadyexperiencedcommunity-ororganization-ledlawsuitsorprotests.c,ci,cii,ciii,civPubliccriticismandskepticismaroundcarbonmanagement—whichmayberootedinalackoftrustoroppositiontoprojectandfundingdecisions—canalsoposeseverereputationalrisksforcompanies,limitingpotentialforindustrypartnershipbuilding.cvIncontrast,well-executedprojectswithmeaningfulengagementandwell-tailoredcommunitybenefitplanscanbuildtrustandleadtosuccessfuldeploymentofcarbonmanagementtechnologiesintheeyesofbothdevelopersandcommunities.Projectscanmitigaterisks(bothtotheprojectandcausedbytheproject)bybeingawareofpotentialEEJimpacts,takingproactivestepstomaximizeprojectbenefitsandminimizeharms,andengaginginearly,frequent,transparent,andtwo-waydialoguewithimpactedgroups.cviAtthecommunityandstakeholderlevel,theremaybearangeofconcernsacrossthecarbonmanagementvaluechain,fromcapturetotransport,storage,andutilization.TheseincludeconcernsaboutsafetyandpotentialenvironmentalimpactsofCO2infrastructureandalackofbenefitsforlocalcommunities.Themagnitudeandnatureoflocalconcerns,andofpotentialimpactsorbenefits,varybyprojecttypeandtechnology,aswellaslocalcontext,requiringthatcommunityimpactandperceptionsbeassessedonaproject-by-projectbasis.Anotherconcernamongcertainstakeholdershasbeenthatinvestmentincarbonmanagementtechnologiesmayprolongfossilenergyproductionanduse.Thisraisesbothproject-specificriskslikethepotentialforprolongedpollutionandhealthimpactsfromfossilfuels,aswellasbroadereconomicandpublicpolicyconsiderationsforfuelusewhichmustbothbefactoredintoassessmentsofwhetheracarbonmanagementprojectisappropriateforagivenfacilityandcommunityandwithinthebroadercleanenergytransition.EEJadvocateshavevoicedbothconcernandhopeaboutthepotentialimpactsofcarbonmanagement.cvii,cviii,cix,cxDOEhasheardtheseconcernscorroboratedinlisteningsessionsandrequestsforinformation.Commonlydiscussedconcernsinclude:Healthimpactsduetoairpollution:Carbonmanagementdeploymentcanhaveapositiveoveralleffectonlocalairquality,butrealizingpotentialbenefitsdependsonprojectdesignconsiderations.Moreresearchisunderwaytounderstandtheextentofthebenefitsandpotentialharms.cxiDeveloperscanandshoulddesignCCUSprojectsthatmaximizeenvironmentalbenefitsbeyondcarbonmanagement.Iftheseenvironmentalconsiderationsareidentifiedandprioritizedearlyinthetechnologyselectionandcommunityengagementprocesses,projectsaremorelikelytomeettheneedsofsurroundingcommunities.Importantdynamicsinclude:•Incertainapplications,point-sourcecarboncapturecanreduceemissionsofcriteriaairpollutantssuchassulfuroxides,nitrogenoxides,particulatematter,andhazardousairpollutantssuchasmercuryandhydrogenchloride,relativetonon-CCUSoperations.cxiiThesebenefitsmayoccurasaresultofengineeringnecessityorasaresultofmajormodificationsthatmaytriggerNewSourceReviewforNationalAmbientAirQualityStandardsforcriteriapollutants.cxiii•Somecompoundsassociatedwiththecaptureunititself(e.g.,aerosolssuchasnitrosaminesfromsolvent-basedcapturesystems)canaddnewpollutantstoasite.PollutionmonitoringandcontrolmechanismsforthesepollutantsarecurrentlystandardoperatingprocedureforCCUSfacilitiesemployingthesecapturetechnologies.54,cxiv•Theenergyneededtooperatethecaptureunitcanintroduceadditionalenergydemandand,dependingontheenergysource,associatedpollutantsatthepointofcaptureandoverthefeedstocksupplychain.Pollutioncontrolequipmentcouldmitigatetheserisks.•Carboncaptureandusemayhelpreduceemissionsinhard-to-abatesectorsbycreatingproductsfromcapturedcarbonemissionsthatwouldotherwiserequirefossilenergyextractionandcombustion.Theemissionsimpactdependsonthecarbonsourceandthedegreeoffossilfueldisplacement.cxv3354Thehigh-rangecostnumbersreferencedinthisreportincludearetrofitfactorthataccountsforpotentialincrementalcapitalcoststhattheretrofittingfacilitymustincurtobeabletointegrateacaptureproject.PathwaystoCommercialLiftoff:CarbonManagementSafetyofCO2infrastructure:EEJadvocateshavefocusedonthepotentialhealthandsafetyimpactsofCO2transportandstorageinfrastructure.•CO2isinert,anasphyxiantthatisheavierthanair,colorless,andodorless.Large-scaleleaksorrupturespresentapublichealthriskforanyoneinthevicinity.A2020CO2pipelineruptureinMississippithathospitalized45peoplehasfocusedattentiononthepotentialsafetyrisksassociatedwithCO2pipelines.InresponsetotheMississippiincident,theDepartmentofTransportationisupdatingitsCO2pipelinesafetystandardregulationsandisfundingstudiestounderstandtheimpactofCO2pipelinereleasesandleaks.cxvi•Ingeneral,CO2pipelineshavehadabettersafetytrackrecordthanotherkindsofpipelines(e.g.,naturalgas)orothertypesoflarge-scaleinfrastructuresuchaselectrictransmissionanddistribution.AccordingtostatisticsfromtheDepartmentofTransportation,therehavebeennofatalitiescausedbyregulatedCO2pipelinesoverthelast20years.InadditiontothehospitalizationsfromtheMississippipipelinerupture,therewasoneotherinjuryfromregulatedCO2pipelines.cxvii•EPAClassVIwellpermittingisdesignedtoprotectundergroundsourcesofdrinkingwateraswellasmitigateimpactstohumanhealthandtheenvironment.SomestatesareapplyingforClassVIprimacyfromEPAtobecometheprimaryimplementingauthorityforClassVIprojectsintheirstate.SomeEEJadvocatesfearstateprimacywillresultinfeweropportunitiesforpubliccommentandreducedconsiderationofEEJconcerns.ItisimportanttobalancetheneedtoexpeditepermittingprocesswithaddressingEEJconcerns.EPAhasindicateditwilllookatstates’environmentaljusticeplanswhenconsideringClassVIprimacyapplications.cxviiiCumulativeburdenoncommunities:EEJadvocatesinsomeregionsmayviewcarbonmanagementprojectsasinconsistentwithlocalneeds.•Thereisabasicconcernaroundthepotentialforutilitiestopassthecostsofcommercialscaledemonstrationsandearlyimplementationofnewtechnologiesontoratepayers.Inmanycases,the45Qcredit,othertaxincentives,andBILprogramswillhelptodefraycostsandinsulateratepayersfromthecostsofFOAKprojects.•SomeEEJadvocatesalsoworrythatCCUSprojectsextendthelifeoffossil-fuelindustrialfacilitiesbeyondwhentheywouldhaveotherwiseshutdown,possiblycontinuingtoharmnearbycommunities.cxixCO2pipelinesitingisalsoacontentiousissueforsomecommunities.Forexample,somelandownersintheMidwesthavevoicedoppositiontolargeCO2trunklineprojectsthere.DOEhasheardadditionalconcernsfromexternalstakeholdersandaffectedcommunitiesrelatingtocarbonmanagement.Thesegroupshaveexpressedconcernsthat:•Thedevelopmentofsomecarbonmanagementprojectsmayprovidefinancialsupporttocompanieswithpoortrackrecordsindisadvantagedcommunities.•Theremaybeinadequateorunsustainedlong-termeconomicbenefitstocommunitymembersafterinitialprojectconstruction.•Fundingcarbonmanagementprojectsmayprovidecontinuedfinancialsupporttofossilfuelcompaniesdespitetheirroleincausingtheclimatecrisisanddelayingclimateaction.•Supportinggeologicstorage,throughEOR,forexample,mayprovidefinancialincentivestokeepextractingoil.cxxi•Carbonmanagementtechnologiesarebeingdeployedwithaperceivedabsenceofadequatedataaboutimpacts.Whileageologicstoragepermitrequiresextensivedatacollectionandmodeling,therearelong-standingfeelingsofmistrustamongfrontlinecommunitieswhofeeltheyareexperimentedon,andtreatedasdisposable,bygovernmentandindustry.cxxii,cxxiii•Carbonmanagementprojectshaveinsufficientlong-termmonitoringandaccountabilityonceFederalfundingends.•Carbonmanagementprojectshaveinsufficientdisasterpreparedness,disasterresponse,anddisasterrecoveryforcarbonmanagementproject.34PathwaystoCommercialLiftoff:CarbonManagementTherearemanywaysforprojectstomaximizebenefitsandminimizenegativeimpactsinlinewithEEJgoalsandprinciples,includingProjectLaborAgreementsandCommunityBenefitsPlans.cxxivThe“PathwaystoCommercialLiftoff:OverviewofSocietalConsiderationsandImpacts”offersspecificconsiderationsandactionsrelatedtothedistributionofimpacts(i.e.,whoexperiencesbenefitsandwhoexperiencesburdens)andprocess(i.e.,enablingimpactedindividuals/groupstomakedecisionsaboutprojectsthataffectthem).Third-partyresearchershavealsodevelopedseveralresourcesandreportsfeaturingrecommendationsforCCUSandCDRdeveloperswithrespecttoenvironmentaljusticeandcommunityengagement.cxxv,cxxvi,cxxvii35PathwaystoCommercialLiftoff:CarbonManagementChapter4:ChallengestoCommercializationandPotentialSolutionsSection4.aOverviewofchallengesandconsiderationsalongthevaluechainKeytakeaways•TheU.S.isthemostattractivemarketforinvestmentincarbonmanagementdeploymentgivenitspolicyenvironment,geologicendowments,experiencewithcarbonmanagement,andtalentedworkforce.•Whilesignificantdeploymentisexpectedoverthecomingdecade,somechallengesremaintoseeingcarbonmanagementdeploymentreachitsfullpotential.Theseinclude:Economicandcommercialfactors:–Costuncertainty,asprojectcostsremainhighforsometypesofpoint-sourceCCUSapplicationsandearlydeploymentsofcertainCDRtechnologies.–Demanduncertainty,drivenbyanabsenceofcompliancemarketsandlimitedevidenceofbankablerevenuestreamsforlow-carbonproductsandvoluntarycarbonremovals.–Lackofcommercialstandardizationforthepartnershipsandcommercialarrangementscarbonmanagementprojectswillrequire.Executionfactors:–Leadtimesinpermittingstorageinfrastructurewhichmanydevelopersseeasapotentiallylengthyanduncertainprocess.–Lackoftransportandstorageinfrastructureinsomeareascouldslowexecutionofcaptureprojects.–Localoppositiontoprojectdevelopmentinsomeinstances.•Eachofthesechallengescanbeovercomethroughconcertedeffortfromthepublicsector,privatesector,andkeystakeholdersandcommunities.–BILandIRAprogramsandincentivessubstantiallyreduceeconomicchallengesforprojectdevelopmentandwillhelptoestablishenablingcarbontransportationandstorageinfrastructure.–BILinvestmentsingeologicstoragepermittingcapacityatthefederalandstatelevelscanhelpincreasetimelinecertainty.–FOAKprojectssupportedbyBILandIRAprogramscandemonstrateandproveinvestmentthesesandhelptostandardizeprojectfinanceanddevelopmentprocesses.–CommunityBenefitPlansexecutedthroughBILandIRAprogramswillestablishbestpracticesforengagement,negotiation,andpartnershipdevelopment.36PathwaystoCommercialLiftoff:CarbonManagementTheU.S.istheworld’smostattractivedestinationfordeploymentofcarbonmanagementtechnology.Stablepolicysupportintheformof45Q,world-leadingexistingdeployment,favorablegeologicresources,andacapableworkforcehavesetthestageforarapidscale-upincarbonmanagementoverthecomingdecade.Whilethefieldissettoseesignificantdeployment,certainchallengesremaintoreachingthefullscale-upinCCUSandCDRthatmodelingsuggestswillbeneededtoachieveU.S.climategoalsfor2050.55Point-sourceCCUSandCDRhavedifferentchallengestoovercome.WhileCCUSprojectshavebeenfederallysupportedatcommercialscales,supportforCDRhaslargelyemphasizedresearchanddevelopmentuntilrecentIRAtaxcreditandBILprogramdevelopments.TheCDRapproachescoveredinthisreportarelesstechnologicallymatureandfacealimiteddemandpool,relativetomanyCCUSprojectswhichmaybefinanceabletodaywithfederalincentivesandprivatesectorpurchasingpower.Commercialandeconomicchallenges1.Costuncertaintyfor"nextgeneration"CCUSapplicationsandearlydeploymentsofDAC,withlimitedconsensusonhowcostswilldecreaseovertimeTheeconomicsofcaptureforlowerpurityCO2streamhavebeenandwillcontinuetobedemonstratedatscalethroughBILprogramsandIRAincentives.DemonstrationandcommercialdeploymentofFOAKCCUSprojectsthroughBILcooperativeagreementsandIRAtaxincentiveswillbenchmarkrealcapitalandoperationalcostsandhelptobetterinformprojectfinancemodels.NOAKprojectswillbenefitfromsomecostreductionsasconstructionandfinancingofthesefacilitiesisderisked.Technologylearningsfromthebuildoutoflow-cost-of-capturefacilitiesmaynottranslatetoequivalentcostreductionsinhighercost-of-capturefacilities;highercost-of-captureapplicationsrequirespecializedequipment(e.g.,aminescrubberandregenerationunits/reboilers)notseeninfacilitieswheretheemissionsstreamisessentiallypureCO2.CostreductionsthatdomaterializeforCCUSmaybelimitedtoCapExcostreductionsasOpExcostscanbedrivenbyfuelinputsandparasiticload.ForcertainCDRapproaches,currentcostsarehighwithadditionalR&D,piloting,anddemonstrationrequired.Assuch,thereisuncertaintyaroundhowcostswillbereduced,withvaryingperspectivesonthescaleandmagnitudeoflearningcurves.Forexample,industrysourcesprojectthatDACcostscouldseeoverallreductionsranging20–50%withscale-upto0.25billiontonnesperyear(GTPA).56Avarietyofcostreductionstrategiesareunfoldinginthemarket.Sometechnologiesareattemptingtocomedownthelearningcurvequicklybydeployingrelativelysmall,modularunits.57Othertechnologiesareplanninglargerplants(e.g.,>1MTPA)toachieveeconomiesofscaleandmayfacelongerlearningcurvesfromfeweriterationcycles.582.Demanduncertaintydrivenbyabsenceofcompliancemarkets,andnascentmarketsforlow-carbonproductsandcarbonremovalsCarbonmanagementprojectsrelyonalimitedsetofrevenuesourcestomaketheirbusinesscaseswork.CCUSandDACprojectswillrelyon45Qasakeyrevenuesource.Evenprojectsthatqualifyfor45Qmaycurrentlyrequirelargeadditionalrevenuestreamsfromvoluntarycarbonmarketsorpremiumsforlow-carbonproductstobefinanciallyviable.3755BNEFistracking~140MTPAinannouncedprojects.Historicallytherehasbeenasignificantattritionratebetweenannouncedprojectsandprojectsreachingcompletionandcommercialoperations.56SeeChapter2forafullexplanationofcostdeclinesfromCoalitionofNegativeEmissionsandClimeworks.57SeeChapter2forcostreductiondrivers.Forexample,asolid-sorbentDACpathwaytoreducecostsinvolvesmanufacturingalargenumberofstandardunits.58SeeChapter2forcostreductiondrivers.Forexample,aliquid-sorbentDACpathwaytoreducecostsinvolvesscaling-upprocessunitsbythemaximumallowablebythedesigntomaximizeeconomiesofscale.PathwaystoCommercialLiftoff:CarbonManagementPubliclyannouncedDACVCMcommitmentswithpriceavailable,$/tonneCO2,andvolumeFigure19.CurrentDACVCMcontractshavehighprices(>$300/tonne),butaretradedatsmallquantitiesVCMcreditsforCDRarecurrentlybeingsoldatalargepricerange(Figure19.).Themarket,however,isimmatureandfewcodifiedstandardsdefinewhatconstitutesacredit.Mostcreditbuyersarealsonotyetenteringlong-term(e.g.,10-year)offtakecontracts;manyinvestorsrequiretheselong-termcontractstobeinplacetoconsiderprojectsbankable.Mostcreditagreementstodatehavebeenfewerthan10yearsformediumvolumes(e.g.,thousandsoftonnesannually),suchasAirbus’s100kTPAofftakeagreementforfouryears.cxxviiiPremiumsforlow-carbonproductsorcompliancemechanismsrequiringemissionscontrolareneededtomakesomeCCUSprojectsfinanciallyfeasible.Premiumsmustbefirmandbankabletostimulateinvestment.Whilelow-carbonsteel,forinstance,cansometimesfetchapremiuminthemarkettoday,demandsignalsaregenerallynotyetstrongenoughtojustifylargeupfrontcapitalexpenses.cxxixCapturedcarbonemissionscanbeusedtocreateproducts,generatingadditionalrevenuestreams.Mostcarbonutilizationpathwaysattempttosubstituteforestablished,lower-cost,higher-carbon,traditionalproducts.Forexample,CO2-to-plasticswilllikelycompetewiththeestablishedtraditionalplasticsindustry.Thewillingnesstopaypremiumsandthedepthofmarketforpremiumsonlow-carbonproductsiscurrentlyloworunproven.40002006008001,0001,2001,8001,40001,6002,0005001,0002,200Source:Stripe2020,Spring2021,andFall2021Climatereports;“Frontierfacilitatesfirstcarbonremovalpurchases”(2022)1HeirloomCarbonTechnologiesencompassesbothdirectaircaptureandmineralizationtechnology38Price($/tonne)Quantity(Tonnes)NotExhaustivePathwaystoCommercialLiftoff:CarbonManagement3.LackofcommercialstandardizationCCUSandcertainCDRprojectsoftenrequirepartnershipsbetweenassetowners,investors,capturetechnologyproviders,transport,andstorage.Thesepartnershipsmakedevelopmentmorecomplexthanotherestablishedclean-energytechnologies,suchassolarandwind.Therearefewmodelsforthesetypesofpartnerships.Forexample,industryplayershavestatedthereisalackofstandardpricingaroundcapture,transport,andstorage.Theseagreementsarecurrentlynegotiatedonabespoke,project-by-projectbasis,complicatingtheoveralleconomicsofprojectsandextendingthetimelineforprojectdevelopment.Executionchallenges4.Lead-timesinpermittingstorageDevelopersandinvestorsworrythatwhattheyseeaslonganduncertainpermittingtimelineswillhinderprojectdevelopment.StorageprojectsthatplantoinjectCO2permanentlyintogeologicformationsfaceaClassVIwellapprovalprocessthatdeveloperssaywillrequirepredictableandconsistenttimelinesandappropriatetechnicalassistance.EPAhasissuedsixClassVIpermitstodate.ForthefirstfourClassVIwells,EPAissuedthepermitswithintwoyears;Thepermitsfortheremainingtwowellstookbetween3and6years.59EPAhaspubliclyannouncedthat,movingforward,itwillstrivetopermitwellsintwoyears,whichisexpectedtoincreaseconfidenceamongdevelopersandinvestors.cxxx,cxxxiReviewandapprovaltimelinesarelikelytoimproveasmorepermitsareissuedandregulatorsbecomefamiliarwiththeprocess.However,storageavailabilityandpermittingmaybearate-limitingfactoronthepaceofdeployment,dependingonstateprimacyeffortsandEPAresources.605.InsufficienttransportandstorageinfrastructureThetransportsectorfacesa“chickenandegg”dilemma:mosttransportandstorageinfrastructureisbeingdevelopedasfit-to-purposeafterthecaptureprojectshavebeenidentified,butmorecaptureprojectswouldbedevelopedifsufficienttransportandstorageinfrastructurealreadyexisted.CongresshasprovidedDOEwithfundingthroughboththeCarbonStorageValidationandTestingprogram($2.5B)andtheCarbonDioxideTransportationInfrastructureFinanceandInnovation(CIFIA)program($2.1B),bipartisanprovisionswhichwereexpresslydevelopedasanintegratedapproachtoovercomingthechickenandegginfrastructurechallengeonaregionalhubbasis.TogethertheseprogramswillhelptofinancecommoncarrierprojectsthatmosteffectivelypairCCUSandCDRtechnologyprojectswithstoragesitesthroughanetworkoftransportationresources.WithappropriatecoordinationofCIFIAandtheLarge-ScaleCarbonStorageCommercializationprogramswithotherBILprogramssupportingcarboncaptureanddirectaircapturefacilities,theimpactof45Qandothertaxcreditswillbeenhanced.6.PotentiallocaloppositionandhesitancytothedevelopmentofsomeCCUSprojectsSurveysindicatealackofawarenessandfamiliaritywithCCUSandCDRtechnologiesamongtheAmericanpublic.Forexample,arecentsurveyintheUnitedStatesshowedthatonly19%ofrespondentsstatedthattheyhadheardaboutcarboncaptureandstorage.WhereCCUSdiscussionhasoccurred,questionsandconcernsaboutCCUShavebeenfocusedonbothtechnicalandsocialtopics.A2009studyofpotentialpilotsitesforCalifornia’sDOE-fundedWestCoastRegionalPartnership(WESTCARB)intwoareasofCaliforniafoundthatcommunitiessawrisksnotjustastechnicalbutsocial,relatingtolevelsofcommunityempowermentandthehistoryofcommunity-industryrelations.cxxxiiiAnearlycollaborativestudyconductedinthesametimeframebyDOE’sRegionalCarbonSequestrationPartnership(RCSP),whichexaminedfivecommunities,foundthat“Inallcases,socialfactors,suchasexistinglowsocioeconomicstatus,desireforcompensation,benefitstothecommunityandpastexperiencewithgovernmentwereofgreaterconcernthanconcernabouttherisksofthetechnologyitself.”cxxxivMorerecently,asthenumberofannouncedCCUSprojectshasgrown,somecommunitieshaveexpressedresistancetoCCUSdeployments.cxxxv3959Factorsspecifictoeachindividualapplicationcansignificantlyimpacthowlongitwilltaketoissueapermit.Individualsiteconditions,communityfeedback,andthecompletenessorqualityoftheapplicationmayrequireadditionaltime.Forexample,EPAmaynotifyapplicantsofdeficienciesintheapplicationormakeRequestsforAdditionalInformation.Theresponsivenessandcompletenessofapplicants’responseswillultimatelydictatethepermittingtimeline.60Forexample,publicmodellingeffortsontheimpactoftheIRA,suchasPrinceton’sNet-ZeroAmerica,settheavailabilityoftransportandcharacterizationofstoragesitesastheratelimiterforCDRdeployment,withthestoragerateboundedbyamultipleofcurrentU.S.oilproductiononavolume-equivalentbasisPathwaystoCommercialLiftoff:CarbonManagementPipelineprojectsmayfaceparticularengagementchallengesgiventhesheernumberoflandownersimpactedbyalonginterstatepipeline.Forinstance,SummitCarbonSolutionshasannouncedthatithassignedmorethan1,200voluntaryeasementswith700landownersinthestateofIowa.cxxxviThenumberofindividualnegotiationsrequiredforthistypeofprojectcanrequireasignificantamountoftimeand,ifnotaddressedearlyintheproject,couldslowprojectdevelopment.ConsideringthelessonslearnedforCCUSandchallengesfacingnewcleanenergyinfrastructure,itiscriticaltounderstandandaddressthesocietalconsiderationsandimpactsoftheseprojectsatlocal,regional,andgloballevels.Meaningfulpublicinvolvementinhowcarbonmanagementtechnologiesandinfrastructureareplannedandbuiltiscritical.DOEiscommittedtoconductingandsupportingmeaningfultwo-wayengagementthatcanhelpcommunitiesandstakeholdersbecomeprojectpartnerswhoseideasandconcernscanimproveoveralloutcomesforprojectdevelopers,whilealsoensuringthattangible,environmental,economic,andsocialbenefitsflowtoaffectedcommunities.Figure20:ChallengesincarbonmanagementaresignificantbutcanbeovercomeSolutionsChallengesSection4.bPrioritysolutionsKeytakeawaysWhilethechallengesfacingcarbonmanagementaresignificant,theyaresurmountablewithconcertedeffort(Figure20.).40Supportforearlyprojectdevelopmentinhigh-costsectorsandDACcanenablecostreductionsSupportforearlyprojectdevelopmentisneededtoreducetechnologyandexecutionrisksassociatedwithlesswidelydeployedtechnologyinpoint-sourcecaptureandCDR.Grantsorcooperativeagreementsforpilotanddemonstrationprojectscankickstartinitialdeployment.BILandIRAcontainbillionsofdollarsinfundingthatcouldbedirectedtoearlydeploymentsofCCUSandCDR.Federal,state,andlocalregulationscouldalsocreategreatercommercialcertainty.1Costuncertaintyfor"nextgeneration"CCUSapplicationsandearlydeploymentsofcertainCDRtypesSupportforearlyprojectdevelopmentinhigh-costsectorsandDACcanenablefastercostreductions2Revenueuncertaintydrivenbyabsenceofcompliancemarkets,andimmaturemarketsforremovalsDevelopmentofbankablerevenuestreamsforcarbonremovalsandlow-carbonproductscanspurdevelopment3Lackofcommercialstandardization(e.g.,sequestrationagreements)Creationofarchetypal,field-testedbusinessmodelsandtermswillenablethedevelopmentandexecutionofpartnerships4Lead-timesinpermittingstorage(e.g.,forClassVIinjectionwells)BuildingEPAandStatetechnicalandregulatorycapacitywillincreasetheefficiencyandeffectivenessoftheClassVIpermittingprogram5LackoftransportandstorageinfrastructureInitialbuild-outfromlargeintegratedprojectsandregionalaggregationsofprofitableprojectscanspurbuild-out6LocaloppositiontoprojectdevelopmentinsomeinstancesCapacitybuildingandearly,frequent,andtransparentengagementbetweendevelopersandcommunitiescanstrengthentrustandimproveprojectoutcomesPathwaystoCommercialLiftoff:CarbonManagementDevelopmentofbankablerevenuestreamsforcarbonremovalsandlow-carbonproductswillspurdevelopmentIncreasingdemandforlow-carbonproductscanleadtomorebankablerevenuestreamsforprojects.Forcarbonremovals,anindustryshiftfromlow-cost,low-qualityremovalstohigh-quality,high-permanenceremovalswillfirmupdemandforCDRtechnologies.Accordingtodevelopers,compliancepoliciesthatrequirecompaniestoreduceemissionsorbuycarbonremovalswouldimprovetheeconomicsoftheseprojectssignificantly.cxxxviiNearerterm,advancemarketcommitmentssuchastheFrontiercommitmentforcarbonremovalpurchasesandtheFirstMover’sCoalitioncommitmentsforlow-carbonproductscanspurdevelopmentofbankablerevenuestreams.Wherepricepremiumsdonotemerge,CO2-andCO-basedproductswillneedtorelymoreonregulationand/orfurthercostreductiontocompetewithtraditionalproducts.Changestotheregulatorylandscapecouldalsosignificantlyalterprojecteconomics.Creationofarchetypal,field-testedbusinessmodelsandtermswillenablepartnershipsStandardizedprojectandfinancingstructurescancreatesignificantbenefitsforCCUSandcertainCDRapproaches.Incentivesfromgovernmentandeffortsbyindustrytodevelophubsorclustersarealreadyspurringpartnershipsthatcoulddrivethekindofcommercialstandardizationthataidedthescale-upofwindandsolar.61Oncepartnershipsareformed,thepublicationofprojectexecutionbestpractices,lessonslearned,andaggregatedpartnershipterms—particularlyfromprojectsthatreceivegovernmentsupportforFOAKdeployments—canactasablueprintforothers.BuildingEPAandStatetechnicalandregulatorycapacitywillincreasetheefficiencyandeffectivenessoftheClassVIpermittingprogramRecentlegislationhasprovidedfundingtoEPAtobuildouttheClassVIprogramandprocessClassVIpermittingapplicationsandEPAhasdevelopedseveraltoolstohelpstreamlinethepermittingprocess.cxxxviiiInadditiontoincreasingappropriationsfortheClassVIprogram,theBILalsoprovidesEPAwithadditionalfundstobothbuildcapacityatthefederallevelandtoprovidegrantstoStates,Tribes,andTerritoriesseekingtodevelop,receive,andimplementClassVIprimacy.cxxxixIncombination,theseadditionalresourcesandcapacityattheStateandFederallevelwillhelptoensuredevelopersreceivetimelypermittingdecisionsandtechnicalassistance.Initiallargeintegratedprojectsandregionalaggregationsofprofitableprojectscanspurbuild-outDevelopmentofinvestableprojectsisalreadyenablingthebuild-outofstoragefacilitiesandlarge-scaletransportinfrastructurethatcanbeusedforfuturecarbonmanagementdevelopments.Developmentofregionalcarbonmanagementhubs,supportedbyDOE’sRegionalDACHubs,CarbonStorageValidationandTesting,andCIFIAprograms,canincreasesharedinfrastructure,thusreducingthetotalamountoftransportandstorageinfrastructureneededforwidespreaddeployment.CapacitybuildingamongbothdevelopersandcommunitieswillstrengthenengagementeffortsandimproveprojectoutcomesEnsuringthatdevelopersunderstandtheneedsofthecommunitiestheyaspiretoworkinandthatcommunitymembersareawareofaproposedproject’sattributesandbenefitscanleadtomoreproductivedialogue.Byempoweringandequippingcommunityleaders,stakeholders,labor,andenvironmentaljusticeadvocateswiththeinformationandtoolsneededtoeffectivelynegotiatewithprojectdevelopersandregulators,projectsaremorelikelytogarnersupportanddelivertangible,meaningfulbenefits.CommunityBenefitPlansrequiredforCCUSandDACprojectsfinancedthroughBILprogramswillhelpestablishbestpractices,providecommunitieswiththeresourcestoadvocateandnegotiate,andadvancepublicawarenessofcarbonmanagementtechnologies.4161DOE’sRegionalDirectAirCaptureHubs,RegionalCleanHydrogenHubs,CarbonStorageValidationandTesting,andCarbonDioxideTransportationInfrastructureFinanceandInnovation(CIFIA)programscanallcontributetohub/clusterdevelopment.PathwaystoCommercialLiftoff:CarbonManagementChapter5:MetricsandMilestonesThreetypesofkeyperformanceindicatorscangaugetheprogressneededforsuccessfulmarketscale-upofCCUSandCDRtechnologies:•OutcomesshowtherelativeimpactofCCUSandCDRonbroaderAdministrationtargets(e.g.,jobcreation,emissionsreduction)•Leadingindicatorsareearlysignsoftherelativereadinessoftechnologiesandmarketsforat-scaleadoption(e.g.,earlysignsindicatingCCUSandCDRare“on-track”fornet-zerotargets);and•LaggingindicatorsareconfirmationofsuccessfulscalingandadoptionofCCUSandCDR(e.g.,evidenceandprogresstowardnet-zerotargets).TheseindicatorswillbetrackedandreportedperiodicallythroughoutDOE.ThereareseveralpriorityKPIsthatwillbeindicativeofsuccessfullytrackingtowardcarbonmanagementdeploymentinlinewithanet-zeropathway.62OutcomesshowtheachievedimpactofCCUSandCDRonbroaderAdministrationtargets•CCUSandCDRtotalinstalledcapturecapacity•TonnesofCO2capturedeachyear•TonnesofCO2permanentlystoredeachyear•TonnesofCO2utilizedeachyearLeadingindicatorsshowtheabilityofcarbonmanagementtechnologiesandplayerstocreatethepathwayneededby2030tomeet2050net-zerogoals•Projectpipeline‒~100MTPAofCCUSorCDRprojectsatanadvancedstageofdevelopmentby2025•Commercialstorage‒2billiontonnesofcommercialstoragecapacityby2030Laggingindicatorswillbemostimportantfortrackingscale-upprogress.Additionally,performingretrospectiveswillhelpinformfuturetechnologycommercializationefforts•Capacityofoperationalprojects‒~100MTPAby2030‒~300MTPAby2040‒~800MTPAby2050•CDRcost‒$100/nettonneofCO2forhigh-qualitycarbondioxideremovalsby20304262GoalsandmetricsdrawfromDOEFECM’s2022StrategicVision,DOE’sCarbonNegativeShot,andmidpointragesfrommodelingstudiesconductedforthiseffortPathwaystoCommercialLiftoff:CarbonManagementChapter6:Referencesi.RangebasedonstudiessummarizedinFigure2.Low-endencompassedby“2021WhiteHousePathwaystoNet-ZeroGHGEmissionsby2050”reportandhigh-endencompassedbyPrinceton’s“NetZeroAmerica”study(2021)ii.IEA,“CarbonCapture,UtilisationandStorage”Retrievedfromhttps://www.iea.org/reports/carbon-capture-utilisation-and-storage-2iii.GlobalCCSInstitute.2022GlobalStatusofCCS2022.(2022).iv.EnergyFuturesInitiative(2023).TurningCCSprojectsinheavyindustry&powerintobluechipfinancialinvestments.Retrievedfromhttps://energyfuturesinitiative.org/wp-content/uploads/sites/2/2023/02/20230212-CCS-Final_Full-copy.pdfv.BloombergNewEnergyFinance.(2022).2022CCUSMarketOutlook.vi.EnergyFuturesInitiative(2023).TurningCCSprojectsinheavyindustry&powerintobluechipfinancialinvestments.Retrievedfromhttps://energyfuturesinitiative.org/wp-content/uploads/sites/2/2023/02/20230212-CCS-Final_Full-copy.pdfvii.UnitedStatesEnvironmentalProtectionAgency,“EPAClassVIPermittingReporttoCongress”,October28,2022viii.UnitedStatesEnvironmentalProtectionAgency,“EPAClassVIPermittingReporttoCongress”,October28,2022ix.Piantaet.alCarbonCaptureandStorageintheUnitedStates:Perceptions,preferences,andlessonsforpolicy(April2021),EnergyPolicy.Retrievedfromhttps://www.sciencedirect.com/science/article/pii/S0301421521000185x.DOEFECM.FossilEnergyandCarbonManagementDomesticEngagementFrameworkRetrievedfromhttps://www.energy.gov/sites/default/files/2022-12/FECM%20Engagement%20Framework_12.1.22.pdfxi.GlobalCCSInstitute.“GlobalStatusofCCS2022”Retrievedfromhttps://www.globalccsinstitute.com/resources/global-status-of-ccs-2022/xii.NationalEnergyTechnologyTransportationLaboratory.(2015)CarbonStorageAtlas,FifthEdition.Retrievedfromhttps://www.netl.doe.gov/sites/default/files/2018-10/ATLAS-V-2015.pdfxiii.NETLDOE.(2022,September).IndustrialDecarbonizationRoadmap.Retrievedfromhttps://www.energy.gov/sites/default/files/2022-09/Industrial%20Decarbonization%20Roadmap.pdfxiv.EPAGHGRPFLIGHTdatabase.(2019).Retrievedfromhttps://www.epa.gov/ghgreportingxv.EPAGHGRPFLIGHTdatabase.(2019).Retrievedfromhttps://www.epa.gov/ghgreporting;GlobalCCUSInstitute.(2022,March).GlobalstatusofCCUS2022.Retrievedfromhttps://status22.globalCCUSinstitute.com/,supplementedbyvariousxvi.NationalEnergyTechnologyTransportationLaboratory.(2015)CarbonStorageAtlas,FifthEdition.Retrievedfromhttps://www.netl.doe.gov/sites/default/files/2018-10/ATLAS-V-2015.pdfxvii.BloombergNewEnergyFinance.“CCUSProjectsDatabase”.Retrievedfromhttps://www.bnef.com/insights/25795xviii.GlobalCCSInstitute(2021)TechnologicalReadinessandCostsofCCS.Retrievedfrom:https://www.globalccsinstitute.com/resources/publications-reports-research/technology-readiness-and-costs-of-ccs/xix.DOEOfficeofFossilEnergyandCarbonManagement.(2017).Acceleratingbreakthroughinnovationsincarboncapture,utilizationandstorage.Retrievedfromhttps://www.energy.gov/fecm/downloads/accelerating-breakthrough-innovation-carbon-capture-utilization-and-storagexx.AmericanInstituteofChemicalEngineers(2021):AdvancedManufacturingProgress:Modular,IntensifiedApproachestoCarbonCaptureandUtilization.Retrievedfrom:https://www.aiche.org/resources/publications/cep/2021/august/advanced-manufacturing-progress-modular-intensified-approaches-carbon-capture-and-utilization;GlobalCCSInstitute(2021)TechnologicalReadinessandCostsofCCS.Retrievedfrom:https://www.globalccsinstitute.com/resources/publications-reports-research/technology-readiness-and-costs-of-ccs/43PathwaystoCommercialLiftoff:CarbonManagementxxi.TheRoyalSociety(2022).Lockedaway–geologicalcarbonstorage.https://royalsociety.org/-/media/policy/projects/geological-carbon-storage/Geological-Carbon-Storage_briefing.pdfxxii.Board,O.S.,&NationalAcademiesofSciences,Engineering,andMedicine.(2019).Negativeemissionstechnologiesandreliablesequestration:Aresearchagenda.Supplementedbyotherxxiii.FY23OmnibusAppropriationsReport.(2022,Dec).Congressionalrecord—Senate,p.S8347.Retrievedfromhttps://www.congress.gov/117/crec/2022/12/20/168/198/CREC-2022-12-20-pt1-PgS7819-2.pdfxxiv.InternationalEnergyAgency.(2022).DirectAirCapture2022.Retrievedfromhttps://www.iea.org/reports/direct-air-capture-2022xxv.LawrenceLivermoreNationalLaboratory,GettingtoNeutral:OptionsforNegativeCarbonEmissions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